A convoluted case of
Randall B. Kiefner, a former broker and investment advisor employed previously by Morgan Stanley and Charles Schwab, is due in court in Seminole County, Florida, next month to face 21 charges of possessing child pornography.
Kiefner and a fellow broker, Christopher Armstrong, were at the heart of a recruiting dispute that resulted in a
Those actions put them in violation of Schwab contract clauses prohibiting them from soliciting business from ex-clients within 18 months of leaving and taking certain types of client information — phone numbers, records of financial services used — with them to a new employer. They and Morgan Stanley were ordered by FINRA's arbitration panel to pay $3.03 million in compensatory damages and $1.2 million attorneys fees and costs to Schwab. Morgan Stanley was also told to pay $3.03 million in punitive damages on its own.
Separately, Morgan Stanley was ordered to pay Kiefner $1.17 million and Armstrong $2.85 million in compensatory damages over defamation and breach of contract claims arising from its decision to fire them about a month after hiring them. The pair was also to receive nearly $675,000 in attorneys fees and costs.
With that exchange of money still pending, Kiefner was arrested at his home in Apopka, Florida, on April 5 and later charged with 21 counts of possessing child pornography.
According to a report from the Seminole County Sheriff's Office, Kiefner had been approached by officers earlier in the day while walking his dog and asked if they could go inside his house and review the contents of his iPhone. He consented and the officers discovered many files containing child pornography, according to the report.
Kiefner pleaded not guilty to the charges on April 6. His bond is set at $735,000 and he's scheduled to appear in court on May 8. Kiefner's defense lawyer, Carlos E. Payas of Orlando, Florida, did not immediately return requests for comment. Kiefner's arrest was first reported by AdvisorHub.
The child pornography charges are just the latest of Kiefner's many legal entanglements. In a petition filed on March 24 asking a New Jersey federal judge to confirm the FINRA arbitration award, Morgan Stanley said Kiefner and Armstrong have not paid their part of the $4.3 million owed to Schwab for the alleged recruiting missteps. Morgan Stanley said it has filed a new arbitration claim with FINRA, the broker-dealer industry's self-regulator, seeking to have the pair pay their portion of the original award, which comes to $2.8 million.
While still waiting for the resolution of that dispute, Morgan Stanley offered to pay the entire $4.3 million owed to Schwab. The court instead had Morgan Stanley set the $2.8 million aside in an escrow account pending the FINRA's arbitration panel's decision.
Morgan Stanley noted in its petition that it's prepared to pay Kiefner and Armstrong the money the FINRA's arbitration panel decided they are owed for the way they were fired.
"While Morgan Stanley does not agree with the arbitration panel's decision, we will fully comply with it," a Morgan Stanley spokesperson said in an email. "By contrast, Armstrong and Kiefner have refused to pay their proportionate share, despite the panel's express finding that they are jointly liable. This action is intended to ensure they pay in accordance with the panel's determination against them."
Armstrong and Kiefner are separately suing the law firm Shumaker, Loop and Kendrick and one of its lawyers, Michael Taaffe. That team was brought in by Morgan Stanley to advise the pair shortly before they were hired on what they legally could and couldn't do when leaving Schwab. According to the suit, Shumaker, Loop and Kendrick, as well as Taaffe, failed to divulge their history of working with Morgan Stanley on previous cases.
Taafe did not immediately respond to a request for comment. Nor did Armstrong and Kiefner's lawyer in that case — Jim Eccleston of Eccleston Law in Chicago.
