February 6, 2022 / Brown Miller
A former broker who was fired in 2020 from Morgan Stanley and later barred from the industry is attempting to fight back with a lawsuit accusing the firm of a “strategy to steal” his $2 billion client book, according to a complaint filed in U.S. District Court for the Southern District of Florida.
Candido Viyella, who spent 32-years in the industry and worked from a Morgan Stanley branch in Miami, accused the firm of a “coup” in firing him as well as his two sons and then defaming him to his former customers as part of a “smear campaign.” He claimed the firm then unfairly interfered with his and his sons’ ability to restart their careers by also blocking his customers from working with him.
“After Mr. Viyella’s employment relationship with Morgan Stanley ended, Morgan Stanley has continued to derive a benefit from Mr. Viyella’s work – the revenue generated from his client base – and has taken steps to cut the Viyellas off from receiving any benefits from those same clients,” Viyella said in the complaint, which seeks unspecified compensatory and punitive damages.
The allegations point to a common complaint among departing brokers who say that in the battle for assets, their former firms have sought to raise questions about the quality of their service or mismanagement of accounts. But his lawsuit is likely a long shot, particularly given his industry bar by the Financial Industry Regulatory Authority last year, lawyers said.
“To say this is an uphill battle is an understatement,’’ said James Sallah, a Boca Raton-based lawyer who was not involved in the case. “I’m not sure how he can expect to prove that he was damaged by MSSB, unless the damages relate to a time period prior to him being barred.”
Morgan Stanley is also likely to seek to have the case dismissed and moved to arbitration as required by employment agreements, Sallah said.
Viyella’s lawyer, Nicola A. Gelormino of Wargo & French in Miami, did not return a request for comment, and a spokeswoman for Morgan Stanley did not immediately return a request for comment.
The case also accuses Morgan Stanley of putting pressure on its internationally-focused brokers to drum up commissions, in part by ranking brokers based on their production and publishing them internally.
“Even new advisors were added to these rankings following their onboarding, facing the pressure of increasing commissions to avoid a ranking at the bottom of the list,” according to Viyella’s suit, which notes he had suggested to managers that they rank by commission instead.
Morgan Stanley fired Viyella, who was said to have generated around $5 million in annual revenue, in November 2020 for allegations that he participated alongside clients in an undisclosed outside investment, according to his BrokerCheck record. Finra barred him in May 2021 after he declined to cooperate with its investigation into the outside activities, according to BrokerCheck.
Viyella then joined a multi-family office, BigSur Partners, where he sought to continue to work with some of his former clients as an unregistered “relationship manager.” As part of his work, he and his sons wanted account statements, trade confirmations and other information so he could provide “money management and consulting services” to some of his former Morgan Stanley customers who wanted to work with him at BigSur.
Morgan Stanley instead told his clients, who still maintained accounts at the wirehouse, that it would not be doing business with Viyella. It falsely “manufactured an administrative issue” in a letter to customers in which it told them that he would not be sharing any of their information, Viyella claimed.
The conflict prompted at least one large client, the Latin Recording Academy, to leave Morgan Stanley and take their business to J.P. Morgan Chase, the lawsuit said.
Viyella’s BrokerCheck report shows five customer complaints since October 2019, all of which involve claims of soliciting an unauthorized outside investment.
An October 2020 claim settled for $140,000 of $1 million requested, while another claim for $500,000 the same month settled for $60,000. A $2 million claim remains pending, as do two others for unspecified damages.
One of the claims was brought by a Panamanian real estate company, Fundacion Nicor, and alleged Viyella had wrongfully recommended they invest in a luxury resort, the Conrad Hotel in Fort Lauderdale, despite its financial troubles, according to a complaint cited by Citywire.
Viyella started his career at Drexel Burnham Lambert in 1988. He also worked at Smith Barney, Prudential Securities and UBS before joining Morgan Stanley in 2009, according to BrokerCheck.