Morgan Stanley Counsel Reportedly Knew of Payment

Morgan Stanley Dean Witter & Co.’s general counsel was told of an in-house lawyer’s decision to pay $10,000 to an informant involved in the arrest of a former employee shortly before the payment was made, the New York Times reported, citing an unnamed source.

Christine Edwards, the counsel, was told of the payment to informant Charles Luethke hours before a wire transfer was completed, the newspaper said. She did not intervene because she had only partial knowledge of Luethke and his role in a sting operation last August against former Morgan Stanley analyst Christian Curry, the paper reported.

Some legal experts said it is difficult to say whether Morgan Stanley may face civil or criminal charges.

“It’s impossible to know what, if any, crimes were committed,” said Stephen Gillers, who teaches legal evidence and ethics at New York University.

If Luethke induced Curry to do wrong or triggered a false arrest by lying about what he did at Morgan Stanley’s behest, “there could be civil liability,” Gillers said.

Morgan Stanley announced Thursday it had suspended two members of its legal department and hired an outside firm to investigate the matter.

Curry, fired last year, has accused Morgan Stanley of discrimination based on race and perceived sexual orientation, false arrest, false imprisonment, libel and slander. He was arrested in August on charges he paid an undercover police officer to plant racist e-mail in the company’s computer system.

Manhattan Dist. Atty. Robert Morgenthau dropped the charges after learning the firm paid the informant. He then announced that Morgan Stanley was under investigation for the payment to Luethke, an acquaintance of Curry who is said to have orchestrated the sting.