"The Morgan Stanley Dean Witter fee arrangement encouraged and rewarded brokers for putting clients on heavy margin," Zamansky said. "And the firm encouraged their brokers to generate huge fees by pushing stocks of companies with whom the firm had investment banking relationships."
Morgan Stanley made US$36,000 on Teeples in fees and margin interest, or 4.25 percent of his assets on an annualized basis.
"I could have taken this money myself, put it in an e-trade account and done better," he said.
Because each panel of arbitrators is different, it is difficult to predict how these investors will fare. But Lewis D. Lowenfels, a lawyer at Tolins & Lowenfels in New York and an authority on securities arbitration, said arbitrators rarely awarded customers all they sought to recover in losses or damages.
"The outcome of these cases will largely be determined by two factors," he said. "First, the ability of the Morgan Stanley customers to have their cases heard together by one or two arbitration panels. And second, by the suitability of each individual customer for the firm's recommended course of action."
For Teeples, life goes on. "I'm going to have to work three times as hard to recover from this series of lapses in judgment," he said. "I have my beautiful wife and two beautiful children. I've had a very, very lucky life. But it doesn't mean that this wasn't wrong."
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