A Morgan Stanley adviser accused of overcharging a client with whom she was having an affair could cost the bank $400 million in damages.
Lynnda Speer, the widow of late Home Shopping Network cofounder Roy Speer, claimed his wealth manager exploited her husband, running more than 12,000 unauthorized trades through his account during the last five years of his life.
Ami Forte made the trades — which earned her millions in commissions — as her client’s physical and mental health declines, the lawsuit alleged.
Roy Speer began his affair with Forte in 1998. It carried on until his death in 2012, Business Insider reported.
Investigators are probing the widow’s allegations are part of a Financial Industry Regulatory Authority hearing in Florida — where details of the affair emerged.
Morgan Stanley could be responsible for $100 million in compensatory damages and $300 million in punitive damages, sources said. That’s more than double the originally estimated $170 million total.
The fine could be increased under Florida’s Elder Exploitation Law, which allows prosecutors to pursue punitive damages for exploitation of elderly citizens.
Lynnda Speer said her late husband turned financial oversight over to Forte as his physical and mental health declined in the last years of his life. That’s when thousands of unauthorized trades started popping up on his account, she said.
From 2007 until 2012, Forte ran about 12,000 Morgan Stanley trades on her client’s account, Lynnda Speer’s attorneys claim. Those extra trades earned her an estimated $40 million commission, according to the lawsuit.
The trades came at a time when Roy Speer was especially vulnerable, prosecutors said.
“He was wheelchair bound and diapered, could not drive, and was attended to daily by a full-time caregiver,” Johnson Pope Bokor Ruppel & Burns LLP, lawyers for Lynnda Speer, said in a statement.
Morgan Stanley has denied the accusations.
“We believe the claims are without merit and we are contesting them vigorously through the legal process,” a Morgan Stanley representative said in a statement.
