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.

Tags: eccleston, eccleston law

Return to Archive

TESTIMONIALS

Previous
Next

I learned two important things working with Eccleston Law. First, I made a friend and ally with Jim and Steph for life. Secondly, and this is a crucial life lesson - if you need counsel, then seek out the very best. Jim was referred to me by a most trusted source. I've never had to hire an attorney for anything. Now, I know the value of hiring an important partner. Meticulous, thorough and detailed in preparation is the best way to describe Jim. Brilliant too, I might add. Bottom line, I would highly highly recommend Jim and Stephany for your legal needs. One of the best life decisions I've ever made.

Howard S.

LATEST NEWS AND ARTICLES

January 19, 2026
FINRA Study Warns of Declining Investor Participation and Rising Fraud Risks Among Younger Investors

A new study from FINRA’s Investor Education Foundation highlights troubling shifts in retail investing, including shrinking participation, heavier reliance on social media for advice, and growing vulnerability to fraud.

January 16, 2026
SEC Signals Sweeping IPO Rule Changes to Ease Path for Smaller Companies

The Securities and Exchange Commission (SEC) plans to overhaul its public offering framework to make it easier for smaller companies to access the public markets, according to remarks SEC Chairman Paul Atkins delivered at the New York Stock Exchange, as reported by Bloomberg Law.

January 15, 2026
FINRA Flags Risks of Early Withdrawals and Exchanges in Registered Index-Linked Annuities

The Financial Industry Regulatory Authority (FINRA) has issued a renewed warning to the industry about the risks consumers face when they exit registered index-linked annuities (RILAs) before the end of the contract term.