Ahmad, who was working as an auditor with the investment lender, alerted the bank management about the huge credit risk before the financial crisis.
Instead of implementing corrective measures to mitigate the risk, the bank ignored his warnings about the deteriorating condition of loan underwritings, and they were "whitewashed" and omitted from the bank’s annual reports to US regulators, as reported by the Financial Times.
In a lawsuit filed in the New York court under the new whistleblower protections as part of the Dodd-Frank financial reform, Ahmad claimed that the bank demoted him, in retaliation to the financial misconduct revealings.
He further accused the bank for deliberately slowing the investigation into his claims and was harassed for more than two years forcing him to go on long-term disability leave.
The auditor has sought reinstatement of his prior position, twice the amount of back-pay with interest as well as unspecified damages.
Denying the wrong doing, the bank said, "Morgan Stanley conducted an exhaustive review of Mr Ahmad’s claims over three years ago, which involved both internal and external counsel and we concluded that his concerns were completely unfounded."
"Morgan Stanley did not engage in any wrongdoing or misconduct with respect to any of the matters raised by Mr Ahmad."
