Morgan Stanley was hit with a $2.4 million arbitration award for defaming a former broker at the firm.

The award, released this week by Finra, skewers Morgan Stanley for defaming Dale L. Cebert, a former rep at the firm in Florida who was terminated in 2014.

In its decision, the three-person arbitration panel said Morgan Stanley managers conducted a “flawed internal investigation that was conducted, acted upon, and reported with reckless disregard for its accuracy and completeness,” and made defamatory statements to Cebert’s customers “in at least a grossly negligent manner (if not with a self-serving, malicious motive).”

The decision ordered Cebert to pay back $1.26 million on two promissory notes, but hit Morgan Stanley with $2.38 million in damages, and another $500,000 in punitive damages.

Net of fees and costs, the firm is on the hook to Cebert for $2.44 million.

Cebert also gets to pocket the $8.7 million balance left on a $10 million promissory note, according to Cebert’s attorney, Peter King of the Wiand Guerra King P.A. law firm in Tampa, Fla.

“We think this is one of the biggest note case awards ever,” said King, who argued that Morgan Stanley lured Cebert to the firm with the bonus in 2012 with the intention of firing him and keeping his clients.

At the time, Cebert and nine staffers at the independent firm of Cebert Wealth Management, in the retirement community of The Villages, Fla., handled about $520 million for clients, King said.

Morgan Stanley discharged Cebert in March 2014 over the operation of, and payments made, through an outside business, according to Finra records.

Cebert countered that his outside businesses, which held personal real estate investments and were reported to Morgan Stanley, paid some branch expenses that Morgan Stanley had promised to pay, but failed to do.

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