CASE NO. 12-01019
Banco National de Mexico S.A., Institution de Banca Multiple, Fiduciary Division, as Trustee of the Trust Agreement Numbered 15437-5 v. Morgan Stanley & Co., Inc.
Erez Law represented Banco National de Mexico, S.A. (“Banamex”) as trustee of a trust which is beneficially owned by a Mexican family against Morgan Stanley and recovered $4,500,000. The FINRA arbitration panel made a finding of negligence and negligent supervision. The claim was based on Banamex’s allegation that Morgan Stanley caused a cross pledge to be recorded on its accounts with Bank Morgan Stanley, a Morgan Stanley affiliate, without its authorization. The cross pledge amounted to a guaranty on loans made by Bank Morgan Stanley to a third party. When the third party’s investments declined significantly in 2008-2009, Bank Morgan Stanley seized approximately $5,200,00 from the Banamex accounts based on an unauthorized cross pledge. The award is significant in that it is a very large FINRA arbitration award and represents the recovery of nearly all of the funds taken from Banamex. The trial lasted eight days and was defended the Greenberg Traurig law firm which represented Morgan Stanley.