Morgan Stanley Adviser Fired Over Hasidic Clientele, Suit Says

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By Patrick Dorrian

A Morgan Stanley financial adviser says in a federal lawsuit he was was told to stop doing business with Hasidic Jewish clients and then harassed and fired when he refused to do so.

Michael Pellegrino says he built a growing “book of business” during his more than four years with the financial industry firm, according to the lawsuit filed Oct. 12 in federal court in Manhattan. His consistent success was recognized by the bank in the form of regular and special bonuses and awards, such as being named “Mortgage Champion” of the year in 2014 and 2015, he says.

But when the firm’s executive director of compliance recognized that Pellegrino’s book included Hasidic clients, he was called into a meeting and interrogated over his professional relationship with the Jewish community, he says. Evan Boucher, the executive director, told him that he needed to “stop chasing and doing business with those Unicorns,” according to Pellegrino’s complaint ( Pelligrino v. Morgan Stanley Smith Barney LLC , S.D.N.Y., No. 1:17-cv-07865, complaint filed 10/12/17 ).

The compliance department later refused to open new accounts brought to Morgan Stanley by Pellegrino because they were Hasidic Jews, offering only bogus excuses for declining the business, the complaint says. When Pellegrino tried to push past those false reasons, Morgan Stanley “stonewalled” his requests for a better explanation, he says.

He also was ordered to shut down an options trading portfolio that some of his Hasidic clients participated in, on the alleged grounds that it was “unsustainable,” Pellegrino says. But a co-worker who operated a similar portfolio and who collaborated with Pellegrino on investment strategies for their separate investment vehicles wasn’t made to shut down his portfolio, according to the complaint.

Reputation Hurt, Suit Says

Pellegrino was later falsely accused of working with clients who weren’t permitted to do business with Morgan Stanley and immediately suspended, he alleges. The firm followed that up by reporting him, without justification, to federal financial regulatory authorities, Pellegrino says.

The religious discrimination and retaliation continued even after he was terminated, as Morgan Stanley froze his accounts, wrecking his credit and damaging his reputation, he alleges.

The lawsuit was filed in the U.S. District court for the Southern District of New York. It includes claims against Morgan Stanley and Boucher under federal and New York state and city anti-bias laws.

Morgan Stanley didn’t respond Oct. 12 to Bloomberg Law’s request for comment.

Derek Smith Law Group PLLC represents Pellegrino. No attorney had filed an appearance yet for Morgan Stanley or Boucher.

To contact the reporter on this story: Patrick Dorrian in Washington at pdorrian@bna.com

To contact the editor responsible for this story: Terence Hyland at thyland@bna.com

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