Morgan money probe

Morgan Stanley Smith Barney has acknowledged it asked a former risk officer to investigate certain trades executed by a big-money broker’s team, but the firm denies allegations that the officer discovered the broker was improperly “churning” securities or that the officer was fired because of the alleged discovery.

Clifford Jagodzinski filed suit in August, citing federal laws protecting whistle-blowers and asking for at least $1 million in damages. In his claim, he said he determined that a star broker, Harvey Kadden, was making unnecessary trades to drive up commissions, and that he was fired in April because he urged the firm to report the violations to regulators.

In a response filed Sept. 7, Morgan Stanley Smith Barney acknowledged that Jagodzinski was asked to investigate trades executed by members of Kadden’s team, and that he discussed those trades with his supervisors.

The supervisors, identified as David Turetzky and Ben Firestein, “fully supported the investigation of these trades by the Plaintiff and others who were also asked to investigate and provide guidance concerning these trades,” Morgan Stanley Smith Barney said in its filing. The firm denied claims that it told Jagodzinski to stop investigating Kadden or that his firing was related to the investigation.