Employment

Published on: November 8, 2024

Court Reaffirms Ruling That Morgan Stanley’s Deferred Compensation Plans are ERISA Plans, Denies Morgan Stanley’s Motion to Reconsider

On November 5, 2024, Judge Paul G. Gardephe of the United States District Court for the Southern District of New York denied Morgan Stanley’s motion to reconsider and, in a detailed opinion, reaffirmed his November 21, 2023 ruling that Morgan Stanley’s deferred compensation plans are ERISA plans.

Last year, Judge Gardephe held that Morgan Stanley’s Compensation Incentive Plan and Equity Incentive Plan are “individual account plans” for the purposes of the Employee Retirement Income Security Act of 1974 (ERISA), a ruling that would require the Plans to comply with ERISA’s statutory protections for employee plan participants. On December 5, 2023, Morgan Stanley moved for “reconsideration and/or clarification” of the Court’s ruling, arguing that (i) the Court overstepped its authority and (ii) factual issues precluded the Court’s determination that Morgan Stanley’s Plans are governed by ERISA. On May 24, 2024 Morgan Stanley took the unusual step of seeking a writ of mandamus from the Second Circuit Court of Appeals, which the Second Circuit denied on August 27, 2024.

In his November 5, 2024 Order, Judge Gardephe examined Morgan Stanley’s arguments at length and rejected them, finding that Morgan Stanley’s contention that this Court committed “clear error” in deciding the ERISA coverage question is “disingenuous and incorrect” and that “[t]he issue of ERISA’s applicability to [Morgan Stanley’s] deferred compensation programs has been front and center since this lawsuit was filed in 2020.” Considering whether testimony proffered by Morgan Stanley in a separate arbitration precluded the Court’s determination that the Plans are governed by ERISA, Judge Gardephe found the testimony “irrelevant” because the question of whether a plan is governed by ERISA is determined from the plan documents. Judge Gardephe again rejected Morgan Stanley’s argument that the deferred compensation plans fall within the U.S. Department of Labor’s bonus regulation and reaffirmed his prior ruling that “Morgan Stanley’s deferred compensation programs are ERISA plans.”

Published on: May 21, 2024

Lax & Neville LLP Pursuing Unpaid Deferred Compensation Claims Against Merrill Lynch

By Lax & Neville LLP

On April 30, 2024, a class action was filed against Merrill Lynch in the Western District Court of North Carolina to recover the deferred compensation that Merrill Lynch cancelled upon Plaintiffs’ voluntary resignation. While we believe there are strong claims against Merrill Lynch for violation of ERISA, we believe that they must be arbitrated at FINRA. See Regulatory Notice 16-25 here. Lax & Neville is pursuing arbitration claims on behalf of former Merrill Lynch advisors for their cancelled deferred compensation comprised of both Long-Term Incentive (LTI) Cash Plans/WealthChoice and Restricted Stock Units (RSUs).

In a similarly situated class action, Shafer, et. al. v. Morgan Stanley, et. al., the Plaintiffs, former Morgan Stanley financial advisors, sued Morgan Stanley in December 2020 to recover their deferred compensation, which was cancelled by Morgan Stanley when those advisors voluntarily resigned. Morgan Stanley moved to compel those advisors’ claims to FINRA arbitration. On November 21, 2023, almost three years after the filing of the Complaint, the Federal Court granted Morgan Stanley’s motion requiring any Morgan Stanley advisor who wants to recover their deferred compensation to file FINRA arbitration claims against Morgan Stanley. See the Court’s Order and Opinion here. For more information on the Morgan Stanley decision, see here.

Our firm has extensive experience successfully pursuing deferred compensation claims in FINRA arbitration. Most recently, we have won more than $35 million in unpaid deferred compensation, interest, costs, and attorneys’ fees for more than two dozen former Credit Suisse investment advisers, and we represent dozens of Morgan Stanley financial advisors seeking to recover their deferred compensation.

Published on: April 24, 2023

Four More Former Credit Suisse Advisers Represented by Lax & Neville LLP Win FINRA Arbitration Award Against Credit Suisse Securities (USA) LLC in the Deferred Compensation Arbitrations

By Lax & Neville LLP

On April 18, 2023, four more former Credit Suisse investment advisers represented by Lax & Neville LLP won a FINRA arbitration award against Credit Suisse Securities (USA) LLC for unpaid deferred compensation. See Simon Clarke, Mitchell Riesenberger, Jose Rodriguez-Villalobos, Jeremy Seidman v. Credit Suisse Securities (USA) LLC, FINRA No. 20-02093. Lax & Neville has tried nine arbitrations resulting in awards of more than $35 million to 30 former Credit Suisse advisers.

The Claimants, Simon Clarke, Mitchell Riesenberger, Jose Rodriguez-Villalobos, and Jeremy Seidman, are now among the numerous former Credit Suisse advisors who have successfully brought claims for their portion of the over $200 million of deferred compensation that Credit Suisse refused to pay its advisors when it closed its US private bank in 2015, violating the advisers’ employment agreements and the firm’s own deferred compensation plans. Credit Suisse took the position, as it has with hundreds of other former investment advisers, that the Claimants voluntarily resigned and forfeited their deferred compensation. A three-arbitrator panel awarded Claimants compensatory damages, including prejudgment interest, in the amount of $2,862,019.32. The FINRA Panel recommended expungement of Claimants’ Forms U-5, the termination notice a broker-dealer is required to file with FINRA. As with hundreds of their colleagues, Credit Suisse falsely reported that Claimants’ “Reason for Termination” was “Voluntary.” The FINRA Panel recommended that the “Reason for Termination” be changed to “Termination without cause.”

Lax & Neville LLP has won more than $35 million in compensatory damages, interest, costs, and attorneys’ fees on behalf of former Credit Suisse investment advisers. To discuss these FINRA arbitration Awards, please contact Barry R. Lax, Brian J. Neville, Sandra P. Lahens or Robert R. Miller at (212) 696-1999.

Published on: March 7, 2022

Brokerchalk Podcast – Shocking Revelations Around Merrill’s CTP Program

By Lax & Neville LLP

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Major bracket Wall Street banks have only recently institutionalized substantial retirement packages for senior advisors to sunset out with very few restrictions. Inheriting advisors who care to take over these books of businesses face an enormous opportunity to convert these books, yield a solid short-term return, and a terrific long-term opportunity to own and grow these books.

However, for these inheriting advisors, the rules associated with the restrictive covenants, the non-solicitation clauses, and the timeframe to yield any return differ substantially at Merrill’s CTP program from those at Morgan Stanley’s FAP program, Wells Fargo Summit Program, and UBS’s Alpha Program.

Published on: March 3, 2022

Advisor Talk with Frank LaRosa – Legal Perspective Series – Advance Your Financial Advisor Career with Brian Neville

By Lax & Neville LLP

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The legal nuances behind making a move to a new firm partner intimidate many an advisor, but it’s time to move past that block. In this first episode in Advisor Talk’s Legal Perspective Series, Elite Consulting Partners CEO Frank LaRosa is joined by Brian Neville, Founding Partner of Lax & Neville, to provide insight and context to listeners as to best legal practices when making a transition.

In particular, this episode focuses on client solicitations when making a move. Topics covered by Frank and Brian include: