Morgan Stanley Smith Barney is seeking confirmation from a Connecticut U.S. District Court judge of a nearly $1 million arbitration award against a former employee. The company is asking the court to enter judgment and order Jonathan Lake to pay $955,910.
The petition, filed Jan. 25 by Morgan Stanley, comes about a month after arbitrator Joseph Arata determined the former Morgan Stanley financial adviser owed the financial services company money he had borrowed via seven promissory notes. Lake, who worked out of the company’s Stamford offices for six years until he left the firm in August 2017, had borrowed the money over several years, as is customary for newly hired financial advisers to do against future commissions.
The petition states the money was due when Lake resigned and took a job last August with Wells Fargo Clearing Services.
“The unpaid balance on the notes, plus accrued interest, became immediately due and payable on that date,” the petition states.
Morgan Stanley claims Lake, a Stratford resident, did not pay any portion of the amount due on the promissory notes after leaving the company.
The company states that Lake agreed to pay back loans totaling more than $950,000 by making nine annual installments, with payments beginning in September 2012. He executed promissory notes for varying amounts of money in 2012, 2013, 2014, 2015 and 2016.
On Aug. 29, Morgan Stanley commenced an arbitration against Lake, culminating with the December award by Arata, according to court papers. Lake did not appear at arbitration.
Lake’s prior counsel, Greenwich solo practitioner Jeffrey Stephens, said Friday, “I withdrew from the case [Nov. 28] because I felt there were opportunities to resolve the case and, when those were not pursued, I decided it was not appropriate to continue representing Jonathan.” Stephens did not elaborate.
Morgan Stanley is asking for a judge to confirm the arbitration award. The award owed Morgan Stanley includes the principal balance and interest of the promissory notes.
Lake did not respond to a request for comment Friday.
Morgan Stanley is represented by John Conway of Loughlin Fitzgerald in Wallingford and Ira Glauber of Dilworth Paxson in New York City.
Glauber said Friday the “petition speaks for itself.” He did not elaborate. Conway did not respond to a request for comment.
As of Friday, a federal court judge had not been assigned to the case.