By Michelle Conlin

STAMFORD, Connecticut (Reuters) - Connecticut prosecutors on Monday dropped charges against a former high-ranking Morgan Stanley banker accused of stabbing a New York City cab driver in a dispute over a fare, saying the driver had concealed evidence.

William Bryan Jennings, of Darien, Connecticut, had been charged with intimidation as a hate crime, theft and assault against cab driver Mohamed Ammar after they argued last December. Jennings had pleaded not guilty to the charges.

Ammar drove Jennings to Connecticut from a holiday party in Manhattan, but when they arrived at Jennings' driveway, a fight broke out over the fare, which the driver said had been agreed upon at $204.

In a brief hearing in Connecticut Superior Court in Stamford, about 40 miles northeast of New York, prosecutor Steven Weiss said he would not proceed with the case because Ammar had for five months concealed from authorities the pen knife allegedly used to assault him.

"I can't go forward with a case where the victim concealed evidence," Weiss said.

Neither the cab driver, Ammar, of the New York City borough of Queens, nor his attorney, Hassan Ahmad, appeared in court.

At a press conference later on Monday, Ammar said he was "really confused" by the prosecutor's decision to drop the case. "I'm very sad, very upset. This is very unfair."

Ammar's lawyer said police had failed to find the knife in a search of the cab after the incident, but his client uncovered it several weeks later beneath the carpet on the front passenger side of the car.

Ammar told prosecutors in May he had found the knife, said the lawyer, Hassan Ahmad, who conceded the delay was a mistake but said the driver was scared to reveal his discovery because he had touched the knife and left fingerprints on it.

Outside the Stamford courthouse after the hearing earlier on Monday, two of Ammar's supporters said the case should have gone ahead.

"We just wanted a judge and a jury to decide. To drop the case, it sends the wrong message," said Mongi Dhaouadi, a representative of the Connecticut Council of Masajid, a Muslim community organization.

Immediately after the incident came to light, Morgan Stanley put Jennings on leave. He is no longer with the firm.

Eugene Riccio, Jennings' lawyer, said: "This is a lesson in the unfortunate circumstance when someone of prominence gets arrested and the public and press jump to the wrong conclusion."

Jennings, who appeared in court wearing a charcoal suit, blue shirt and blue tie, told reporters after the hearing: "The outcome speaks for itself."

(Additional reporting by Chris Francescani; Writing by Dan Burns; Editing by Dan Grebler, Grant McCool and Todd Eastham)