Judge Tosses Morgan Stanley Suit That Featured Embarrassing E-Mails

A judge has dismissed all but one count of a sensational lawsuit against Morgan Stanley in which a former technology manager claimed he was fired for uncovering a series of embarrassing e-mails that cast doubt on the ethics and judgment of senior managers at the bank.

In ruling on the suit, U.S. District Court Judge Thomas Griesa said the plaintiff, Arthur Riel, was not wrongfully dismissed in part because Morgan Stanley house rules forbidding retaliation against whistleblowers are not legally binding. "This is not a contractual promise on the part of Morgan Stanley," Griesa wrote.

Riel, a former IT employee who managed Morgan Stanley's e-mail archive, said he was fired for uncovering the e-mails while performing his duties.

Some of the e-mails entered as evidence in the case showed Morgan Stanley chief technology officer Guy Chiarello currying favor with IT vendors to obtain premium sports tickets and lavish junkets. They also showed Morgan Stanley execs pressuring the firm's IT department to buy from vendors from whom they hoped to win investment banking business.

In a ruling handed down in mid-February, Griesa dismissed seven of the eight causes of action that Riel filed against Morgan Stanley, most of them related to his termination. The remaining cause of action, an allegation of breach of contract, was left standing by Griesa.

Morgan Stanley may not have heard the last from Riel, however. Records in U.S. District Court for Southern New York show that he has filed an amended complaint that contains many of his original allegations.