New York Securities Lawyer Blog
On June 21, 2018 U.S. District Judge William Orrick (“Orrick”) in San Francisco granted a Motion to Dismiss (“MTD”) in the case Christopher M. Laver v Credit Suisse Securities (USA), LLC. Orrick ruled that the plaintiff Christopher Laver was bound by an agreement to arbitrate employment-related disputes and could not pursue his proposed class action on behalf of roughly 200 brokers.
In the Order Granting the Motion to Dismiss, Orrick wrote the following:
As Laver notes, Regulatory Notice 16-25 characterized as dicta a discussion in a FINRA Board of Governors 2014 enforcement action decision. Regulatory Notice 16-25 at fns. 17, 23 (discussing Board of Governor decision in Dept of Enforcement v. Charles Schwab & Co., 2014 FINRA Discipl. LEXIS 5 (April 24, 2014)). The Cohen court relied on that now-FINRA-disapproved-of-dicta from the Schwab decision suggesting firms could contract around employee rights to a FINRA arbitration (but not consumer rights to FINRA arbitration). However, the fundamental point remains; nothing in Regulatory Notice 16-25 indicates that member firms cannot contract around other, less fundamental provisions of the FINRA Code. Rule 13204 itself provides that its subparagraphs “do not otherwise affect the enforceability of any rights under the Code or any other agreement” indicating that the provisions of this specific rule are subject to waiver by private agreement. See Rule 13204
This class action suit was brought in response to the actions surrounding Credit Suisse Group AG’s (“Credit Suisse”) shuttering of its U.S. Domestic Private Banking business on October 20, 2015. Credit Suisse announced it was entering into an exclusive recruiting arrangement with Wells Fargo & Company (“Wells Fargo”). Credit Suisse proceeded to take the unreasonable position that if a financial advisor does not accept employment with Wells Fargo, he or she forfeited their deferred compensation, even though in most, if not all, instances the deferred compensation is paid to the financial advisor if he or she is terminated without cause. Since Credit Suisse’s financial advisors’ termination is undoubtedly without cause since they closed their U.S. Domestic Private Banking business, these advisors are legally entitled to their earned deferred compensation.
Financial Advisors formerly employed with Credit Suisse have the right to Arbitrate claims for deferred compensation in FINRA. The attorneys at Lax & Neville LLP have extensive experience in successfully prosecuting claims on behalf of employees against their FINRA member firm employers. Specifically, Lax & Neville LLP represents several dozen former Credit Suisse employees in employment disputes, including for deferred compensation. If you were employed with Credit Suisse and have a deferred compensation claim or other disputes, please contact Lax & Neville LLP today at 212-696-1999 to schedule a consultation.