A Morgan Stanley arbitration case is showing the fine line firms must walk when trying to accommodate their employees' political ambitions.
The large wirehouse was ordered by a three-member arbitration panel on Feb. 2 to pay $147,000 to Deborah Adeimy, a former employee who had sought a leave of absence in late 2021 so she could run as a Republican in Florida's 22nd congressional district. In a complaint to the Financial Industry Regulatory Authority — the broker-dealer industry's self-regulator — Adeimy accused her onetime employer of blocking her political aspirations.
Kate Meisen, the senior communications director for Adeimy, said in an email Thursday that the whole dispute could have been avoided had Morgan Stanley followed its own policies. Like most large firms, she said, Morgan Stanley has written procedures allowing employees to run for office as long as they're careful to make sure their political activities are kept separate from company business.
Morgan Stanley, Meisen wrote, "specifically states that" employees "can run OUTSIDE business hours." Yet every reply Adeimy received to her repeated requests for a leave of absence said that she'd "have to resign to run," according to Meisen.
A Morgan Stanley spokesperson declined to comment for this article.
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Adeimy eventually did leave Morgan Stanley in late 2021 only to go on to be
Meisen said Morgan Stanley, like most Wall Street firms, has a very clear policy on what advisors and other employees must do if they want a leave to run for office. Any political opinions they air, for instance, must be clearly made in a "personal capacity" and not be portrayed as a reflection of corporate policy.
Adeimy's arbitration case against Morgan Stanley specifically accused the firm of the breach of an employment agreement, a contract and equitable and just principles of trade; tortious interference with advantageous business relationships; breach of fiduciary duties; wrongful termination; and inequitable treatment. Her initial request for damages was for roughly $11 million, far more than then $147,000 she actually received.
As is typical in such arbitration cases, the panel that ruled in Adeimy's case gave no reasons for why it found in her favor or why it awarded her the amount it did. Meisen said Adeimy is reviewing the decision.
Bill Singer, a long-time securities lawyer and recently retired author of the Broker and Broker blog, said Morgan Stanley seems to have mistakenly viewed Adeimy's campaign as an "outside business activity."
"This rates as a very serious public policy issue," Singer said in an interview on Wednesday. "If an individual decides they want to run for public office, I don't think any reasonable person would think that's a business activity."
Singer said FINRA uses two criteria to decide if an advisor is engaging in an outside business. It first looks at if a person can be deemed an "employee, independent contractor, sole proprietor, officer, director or partner of another person" or firm. That clearly wasn't the case with Adeimy, he said.
FINRA then looks at if the advisor in question could have a reasonable expectation of compensation from the outside activity. That would have been true of Adeimy, he said, only if she had won the election.
"We're seeing more and more advisors run for local office, school boards, city councils, state assemblies and senates," Singer said. "Can you imagine if your firm could fire you for that, or refuse to give you permission to engage in that?"
That's not to say, Singer added, that firms have to countenance all types of political activity. They could fire someone who becomes associated with extremist parties or views.
"But you can't really argue that having someone who's running as a Democrat or a Republican for a seat is detrimental to the company," he said.
Adeimy's website and a campaign video posted there place emphasis on her experience as a financial advisor. Nodding to her family's history in the construction industry in and around West Palm Beach, Adeimy said, "While my family helped construct buildings, I helped families and businesses grow and protect what they built as a trusted financial advisor and certified financial planner."
FINRA's BrokerCheck online database
According to BrokerCheck, Adeimy got her start in the industry in 1990 in the Weehawken, New Jersey, office of Paine Webber. She did stints at Merrill, Bear Stearns and Citi before joining Morgan Stanley for the first time in 2009, in the firm's North Palm Beach, Florida, office.
She left there in 2010 to return to Merrill for almost four years, and then jumped firms again to Wells Fargo in December 2018. She left Morgan Stanley in 2021 and was listed as self-employed until September 2022 while she ran for the U.S. House. Her most recent affiliation was with JPMorgan, which she left in November last year.
