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Investor's claim against Morgan Stanley Smith Barney is reinstated

Marjorie Brown first invested with Smith Barney Shearson in 1982.   Richard Ress  became her account adviser in 2004 and persuaded her to move her entire account to one particular investment in 2007; the account incurred substantial losses and she sued.  Ress and the corporate entities did not file an answer, so Brown's attorney entered a default.  The defendants then asked the court to set aside the default and to enter summary disposition based on Brown's (required) execution of an arbitration agreement with the original predecessor investment firm.

The trial court lifted the default and granted summary disposition to the defendants, and Brown appealed.  The higher court noted that the Defendants had not established a meritorious defense to the claim sufficient to justify the lifting of the default, and also noted that the court had not supported its decision with sound reasoning on the record.  The appeals judges noted in particular that the defendants had not established an admissible record showing that the corporate evolution of Smith Barney demonstrated a record enabling the successors to benefit from Brown's original arbitration agreement.  The case was reinstated and returned to the lower court for further analysis.

Thompson O’Neil, P.C.
309 East Front Street
Traverse City, Michigan 49684
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