Ex-NBA, NFL players win $800K case against Morgan Stanley
Two former NBA and NFL players won over $800,000 in damages from Morgan Stanley, which they say had been negligent in supervising a rogue broker who led the athletes into worthless investments.
Keyon Dooling and John St. Clair expressed relief and satisfaction with the arbitration victory for both themselves and other athletes who have run into similar problems.
"There are many of us that have been taken advantage of by banks and financial advisers and never receive any restitution," St. Clair says.
The players' attorneys hailed the arbitration panel's decision as a blow against financial advisers abusing the trust of their athlete clients.
"Too often, professional athletes fall victim to financial mismanagement, and this is one of the few instances where an athlete has been able to recover his money,” says one of the lawyers, Chase Carlson, who is based in Miami.
The dispute between the firm and former clients arose due to investments in two businesses recommended by Aaron Parthemer, a now-barred broker who was not named in the case, according to a copy of the arbitration award.
In 2009 and 2010, Parthemer convinced Dooling, a first round pick in 2000 who played for more than half a dozen teams, including the Miami Heat, to invest $700,000 in Global Village Concerns, an apparel company, and Club Play, a Miami Beach nightclub. St. Clair, who played in 11 seasons for the NFL for several teams including the Miami Dolphins, invested $200,000 in the apparel company upon Parthemer's recommendation.
Both investments became "worthless," according to the ex-players' attorneys. The arbitration panel, which made its decision this week, ordered Morgan to pay Dooling and his wife Natasha $608,300. St. Clair and his wife Shannon won $206,000. A Morgan Stanley spokeswoman says the firm disagrees with the arbitrators' decision.
“The investments at issue had nothing to do with the firm and the former FA failed to disclose his outside investment activities to Morgan Stanley,” the spokeswoman adds.
BARRED FOR OBA
Parthemer was a broker with 20 years industry experience, according to FINRA BrokerCheck records. He joined Smith Barney in 2006, staying through that firm's merger with Morgan. In 2011, he left the wirehouse to join Wells Fargo.
Four years later, FINRA barred him from the industry for allegedly failing to disclose outside business activities, according to the regulator.
That alleged misconduct included lending $400,000 to three clients without permission from his firm, presenting undisclosed private securities transactions in which clients invested more than $3 million and providing false information to Morgan Stanley, Wells Fargo and FINRA, according to a copy of the regulator's disciplinary action against Parthemer.
He accepted the regulator's findings without admitting or denying the allegations, according to the disciplinary report. Parthemer also was recently stripped of his CFP designations by the CFP Board.
BASKETS OF TEQUILA
Parthemer apparently kept a high profile, being photographed with celebrities such as singer Chris Brown and rap star Bow Wow.
FINRA says that the ex-broker's undisclosed business activities included running a Miami Beach nightclub; the regulator does not name the club, but says that several NFL and NBA athletes invested in the venture, in which Parthemer served as CEO and managed its day-to-day operations.
He also operated a marketing firm on the side, and won a contract to promote an unnamed brand of tequila, according to FINRA records. His promotion efforts included "delivering complimentary gift baskets of the tequila to several NFL and NBA teams," FINRA says.
Attempts to reach Parthemer for comment were unsuccessful.