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FCPA-Related Matter Against Morgan Stanley Allowed To Proceed


In the aftermath of the 2012 Garth Peterson enforcement action (a former managing director for Morgan Stanley’s real estate business in China) and the DOJ’s so-called “declination” of Morgan Stanley, the company seemed to become the darling of the compliance community.

Never mind that the “declination” appeared to be little more than a conveniently timed public relations campaign by the DOJ (see here).  Moreover, according to Peterson, the DOJ was lying about Morgan Stanely’s supposed “wonderful compliance program.” (See here).

As first reported here by Bloomberg, an FCPA-related administrative Sarbanes-Oxley retaliation claim filed by Christopher Garvey (a former in-house lawyer at Morgan Stanley in Hong Kong) recently survived the company’s motion to dismiss.

In his complaint, Garvey alleges in pertinent part:

“Starting in early 2015, close to 10 years into his tenure with the Company, Mr. Garvey became aware that Morgan Stanley was engaged in conduct in violation of the U.S. Foreign Corrupt Practices Act and other US securities laws. Mr. Garvey objected to these practices repeatedly and strenuously, first by advising the individuals involved not to pursue their proposed course of action and, when that failed, escalating the issue to senior management.

In February 2016, Morgan Stanley constructively discharged Mr. Garvey in retaliation for his objections to the Company’s ongoing violations of the FCPA when he resigned his position because instead of heeding Mr. Garvey’s concerns, the Company informed Mr. Garvey that he would in the future require the approval of the persons responsible for the conduct at the root of Mr. Garvey’s concerns in order to be considered for any further promotion, and encouraged him to consider his options elsewhere if he wasn’t satisfied.

As a result of his retaliatory termination, Mr. Garvey has suffered significant financial, reputational and emotional harm, and holds a strong claim against Morgan Stanley under SOX.”

Thereafter, the Occupational Safety and Health Administration within the Department of Labor dismissed Garvey’s complaint finding that the evidence showed that Garvey “has not suffered an adverse action and as a result did not establish a prima facie allegation of a SOX violation.”

Garvey appealed to an administrative law judge and Morgan Stanley filed a motion to dismiss. In 2018, the administrative law judge denied Morgan Stanley’s motion to dismiss and in doing so shed additional light on Garvey’s claim. Specifically, Garvey was concerned about “the engagement of a consultant in India that gave rise to potential corruption related concerns including violations of the FCPA.”

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