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Judge Dismisses Most Counts In E-Mail Suit Against Morgan Stanley

Former IT manager's case undermined by company whistle-blower policy with no teeth.
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 embarrassing e-mails that cast doubt on the judgment and ethics of senior managers at the bank.

U.S. District Court Judge Thomas Griesa said the plaintiff, Arthur Riel, was not wrongfully dismissed, in part because Morgan Stanley's internal rules forbidding retaliation against whistle-blowers aren't legally binding. "This is not a contractual promise on the part of Morgan Stanley," Griesa wrote. Riel, 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. In others, Morgan Stanley execs appeared to pressure the firm's IT department to buy from vendors from which they hoped to win investment banking business.

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

But Morgan Stanley may not have heard the last on this. Riel has filed an amended complaint in U.S. District Court that contains many of his original allegations.