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Ex-Morgan Stanley advisor embroiled in $38M client scandal lands at IBD

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An ex-Morgan Stanley broker found liable in a $38 million arbitration award has found a new firm — but she still faces a FINRA investigation, a possible promissory note payment and a lawsuit.

Independent broker-dealer Pinnacle Investments hired Ami Forte despite the ongoing legal wrangling surrounding her late client, Home Shopping Network co-founder Roy Speer. Forte will open a new office in the Tampa, Florida, area, the Syracuse, New York-based IBD announced this week.

Speer’s widow after 52 years of marriage, Lynnda Speer, accused Forte of manipulating him towards the end of his life by having an affair with him and making excessive and unauthorized trades, according to Morgan Stanley. Forte has said she didn’t manage his accounts at the time of the improper trading.

Forte has also filed her own arbitration case against her former firm. Morgan Stanley fired her shortly after the Speer’s estate’s March 2016 arbitration award, and FINRA gave notice in January of a preliminary recommendation of disciplinary action against her, according to her BrokerCheck record.

Lynnda Speer has separately sued Forte in Pinellas County, Florida, over a condominium in the Cayman Islands the estate says Forte sold from a trust with Roy Speer as settlor to an entity owned by Forte, without authority to do so. Like the FINRA investigation and Forte’s arbitration case, the matter is pending.

Forte generated $10.3 million in revenue in 2010 at Morgan Stanley, according to the firm’s arbitration counterclaim. In 2008, the wirehouse made her the first female advisor to be named a managing director. Forte comes with personal baggage but also business prospects, says attorney Tom Lewis.

“She obviously had a big reputation in the industry. She probably has a book of business of clients that she’s bringing over to Pinnacle. So Pinnacle has very little to lose in this situation,” says Lewis, a Stevens & Lee attorney who argues arbitration and employment cases but isn’t involved in any of Forte’s.

“It would be a whole different story if the behavior occurred at Pinnacle,” he adds, predicting that any enforcement actions or arbitration decisions would hold Forte rather than Pinnacle liable. “Pinnacle comes out of this one clean, and there should be no legal issues associated with Pinnacle hiring her.”

Advisors should expect more regulatory requirements, enforcement actions and uncertainty in 2018, experts say.
December 11

Forte’s lawyer, Robert Pearl, declined to comment and referred all questions to Pinnacle. However, a company press release about Forte’s hiring as an advisor and chief business development officer included a prepared statement by Forte.

“It’s refreshing to be part of a financial services firm where women are represented throughout the organization, from support positions up to and including the boardroom, and where their voices and ideas are genuinely valued,” Forte said. “I really look forward to opening the new Tampa-area office.”

The office, Pinnacle’s 10th, is slated to open by this fall. The IBD currently has nearly 40 advisors and more than $1.2 billion in client assets. Representatives for Pinnacle declined to speak on the record, but the chief business development officer at its holding firm gave an emailed statement.

Pinnacle sees Forte as “one of the industry’s leading women advisors,” and she has the full support of her new firm with regard to matters involving her former employer, Liz Bartlett said.

“We thoroughly vet all advisors before they join Pinnacle and Ms. Forte is no different,” Bartlett said. “We are very confident that any review of Ami’s work will vindicate both her judgment and talent as an advisor.”

FINRA’s investigation of Forte concerns potential violations of rules around excessive trading, suitability and high standards of commercial honor, according to BrokerCheck. A FINRA spokeswoman declined to comment on Forte, noting the regulator doesn’t comment on investigations.

A spokeswoman for Morgan Stanley didn’t respond to requests for comment. The firm had cited Forte for “allegations involving adherence to industry rules and/or firm policy including with regard to use of trading discretion and timely reporting of liens” in her March 2016 termination.

However, Forte filed an arbitration claim against Morgan Stanley in August 2016, alleging that no men — or anyone else — involved with the case received the same punishment. She accused the firm of defamation, breach of contract, unpaid compensation, interference and wrongful termination.

The romantic relationship between Forte and Roy Speer started around 1999 and ended in late 2007, according to the arbitration claim. She was “completely unaware of any improper bond trading activity in the Speer accounts at Morgan at any time,” the claim says.

Roy Speer died in August 2012 at 80 years old after being diagnosed with Alzheimer's disease and dementia, according to Lynnda Spear. He had once appeared on the Forbes list of the 400 wealthiest Americans at No. 223 with an estimated net worth of $1.1 billion, Forte’s claim says.

Forte, who is in her early 60s, was divorced at the time of their relationship and Speer had been estranged from his wife for years, she says. She maintains that many people at Morgan knew about their relationship, and the claim requests an order for Morgan to file an amended Form U5 about her exit.

The U5 filing branded her “a person not worthy of being employed in the securities industry,” according to the claim. “Ms. Forte will be forced to explain the false and defamatory statements throughout her working career, and it will undoubtedly inhibit her in any future career move in the industry.”

In its counterclaim denying her allegations, Morgan pointed out that the Speer estate’s March 2016 award held her jointly liable for the damages. The wirehouse’s eventual $38 million payout consisted of $32.8 million in compensatory damages, $3.8 million in attorney fees and $1.5 million in other costs.

Morgan Stanley is seeking a roughly $2.3 million payment from Forte for outstanding promissory notes, along with nearly $897,000 in attorney fees related to the Speer arbitration and an amount to be determined by the arbitrators for her share of the Speer award, according to the claim.

“By maintaining an undisclosed sexual relationship with a client (indeed, a client married to another client), who was in ailing health, while generating significant commissions from the client’s accounts, Forte exposed herself to precisely the adverse result that occurred in the Speer arbitration,” it says.

Lynnda Speer had filed the claim in February 2013, the year after her husband’s death, on behalf of his estate. The hearings in the case lasted from January 2015 to February 2016, spanning 142 sessions over 70 days with 35 witnesses and “a number of boxes of evidentiary exhibits,” according to the award.

Speer’s April 2013 lawsuit in Pinellas County accuses Forte of elder abuse and breach of fiduciary duty, the complaint shows. Speer also asked for a full accounting of Forte’s income from the condo and the voiding of the 2011 transaction.

The parties are completing discovery in the case in advance of possible hearings late this year or next year, according to Scott Ilgenfritz, a lawyer from Johnson Pope Bokor Ruppel & Burns who represents Speer.

Ilgenfritz was surprised to hear that Pinnacle had hired Forte, he says. However, he declined to discuss whether the new position might pose any problems for Pinnacle or its clients.

“The arbitration proceeding from Ms. Speer’s perspective was never about the money,” Ilgenfritz says. “It was about doing the right thing.”

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