Reif Law Group, P.C., an investor-side securities and financial elder abuse law firm, has filed a petition in San Diego County Superior Court on behalf of Michael J. Massery, a 77-year-old retiree, seeking FINRA arbitration of financial elder abuse and fiduciary duty claims against Morgan Stanley Smith Barney LLC and advisor Nicholas S. Westendorf. The petition alleges the firm engaged Mr. Massery in a covered call strategy as protection for his long-held stock, then kept rolling the options for four years after he asked in writing to get out, until his Apple and NVIDIA shares were called away.
“Mr. Massery gave the firm a four-word instruction: don’t lose my shares,” said Brandon S. Reif, President of Reif Law Group. “As we allege, he was put in a strategy that surrenders the shares if the stock keeps climbing. In our view, calling that protection is like calling a lit fuse a safety feature.”
How a “Protective” Strategy Allegedly Cost a Retiree His Shares
A covered call trades a stock’s upside for a premium: if the stock rises past the “strike” price, the investor may buy back the calls, “roll” them into new contracts, or give up the shares.
According to the petition, Mr. Massery, a buy-and-hold investor who had never traded options on his own, was 71 when the strategy began. It alleges he told the firm repeatedly in writing that he did not understand it, that a Managing Director answered by pointing him to an options industry website, and that in November 2020 he asked for the options to be closed out “so that I no longer have any positions.”
“When a man in his seventies writes, as we allege he did, ‘I still don’t understand this strategy,’ the answer is not a website link and another roll,” Reif said. As Apple and NVIDIA rose sharply, the petition alleges, the firm rolled the positions through more than 200 option transactions over four years while the cost of exiting grew from about $434,000 to about $1 million. It alleges that in December 2024 approximately 8,000 NVIDIA and 9,000 Apple shares were called away at strike prices far below market value, followed by a tax bill on the gains.
The Firm’s Own Words, as Alleged
The petition quotes emails in which Morgan Stanley’s Mr. Westendorf wrote, “I have said from the start that I do believe you should have never been put into this strategy,” and “We are still in the situation of kicking the can down the road.” Reif put it bluntly: “We allege they kept kicking it, and charged a commission on every kick, until the shares were gone and the tax bill arrived.”
The petition seeks damages it presently estimates exceed $5 million, plus enhanced and punitive damages and attorneys’ fees.
Voce: The Elder Abuse Act Looks at What the Firm Knew
The filing follows the California Court of Appeal’s October 8, 2026 decision in DeVone v. Morgan Stanley & Co., LLC (No. B339219), a separate Reif Law Group case. The court held that the Elder Abuse Act asks what a defendant “knew or should have known” when the conduct occurred, not how the account performed in hindsight. “Under the Elder Abuse Act, a defendant who exposes an elder to a foreseeable risk of harm does not escape liability merely because the risk did not materialize,” the court wrote. The unpublished decision involves different parties and facts. “Here, we allege, the firm knew because Mr. Massery told them, in writing, repeatedly,” Reif said.
“Covered calls get pitched to retirees as a conservative way to earn income from stock they already own,” Reif said. “If you hold a concentrated, long-held position and were sold that pitch, ask what happens to your shares and your tax bill if the stock keeps rising. If you have already lost shares to called-away options, talk to a lawyer who represents investors.”
The allegations have not been proven.
Case: Michael J. Massery et al. v. Morgan Stanley Smith Barney LLC et al., Superior Court of California, County of San Diego, Case No.26CU056521C. Petition filed October 22, 2026.
About Reif Law Group, P.C.
Reif Law Group, P.C., based in Beverly Hills, California, represents investors, their families and entities against brokerage firms in arbitration and in court. Its practice includes failed investments and investment strategies, unsuitable recommendations, options losses, financial elder abuse and breach of fiduciary duty. The firm is led by Brandon S. Reif. Investors with questions about investment losses may contact the firm at (310) 494-6500 or www.reiflawgroup.com.
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