Arbitration Mandated for Former Morgan Stanley Advisors' Class Claim on Deferred Compensation

Posted on November 28th, 2023 at 1:10 PM
Arbitration Mandated for Former Morgan Stanley Advisors' Class Claim on Deferred Compensation

From the desk of Jim Eccleston at Eccleston Law 

A federal judge in Manhattan has granted Morgan Stanley’s request to transfer a potential class action lawsuit to arbitration.

In a 56-page ruling, Judge Paul G. Gardephe stated that Morgan Stanley successfully demonstrated that advisors had agreed to address such claims through private arbitration as outlined in their employment and bonus contracts. Moreover, the advisors did not opt out of Morgan Stanley’s alternative dispute resolution program, Convenient Access to Resolution for Employees (CARE).

Judge Gardephe concluded that the former advisors had claims under the Employment Retirement Income Security Act (ERISA). However, he underscored that the plaintiffs failed to establish that these claims were exempt from arbitration. Despite his ruling preventing the advisors from pursuing class representation, individuals can still independently seek the same damages or relief through arbitration, mirroring what was sought in court.

As reported by AdvisorHub, lead plaintiff Matthew Shafer initiated the case in December 2020, alleging that Morgan Stanley’s compensation plan violated federal laws concerning vesting and anti-forfeiture rules for pension and retirement packages. The plaintiffs, including other former Morgan Stanley advisors who have transitioned to different firms, argue that the company unjustly withholds deferred pay when advisors move to competitors like Raymond James, Ameriprise Financial, and Stiel, Nicolaus & Co.


Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

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Thank You from the bottom of our hearts for all you have done for us. When we realized this was a very bad investment - we did not know where to turn for help. Then we received your name. When we called you - you were so kind to us and then agreed to help us. For this we are so very grateful. The world would be a much nicer place if there were more people like the two of you in it. We will always remember all the help and kindness you have shown us. Thank you so very very much for everything.

Wayne and Judy S.


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