Department of Labor Sued Over Illegitimate Deferred Compensation Opinion Letter
From the desk of Jim Eccleston at Eccleston Law
Three former Morgan Stanley advisors filed suit this week against the U.S. Department of Labor (DOL), claiming the agency exceeded its authority and was unduly influenced when it issued an advisory opinion that sought to undermine their deferred compensation claims. As reported by AdvisorHub, the advisors allege that the DOL’s September opinion unlawfully sided with Morgan Stanley by determining that the firm’s deferred compensation program is not governed by the Employee Retirement Income Security Act of 1974 (ERISA).
The lawsuit, filed in federal court, asserts that Morgan Stanley sought the advisory opinion to “circumvent” unfavorable court rulings and “prevent” claimants from pursuing their rights in arbitration. According to AdvisorHub, Steve Sheresky, Jeffrey Samsen, and Nicholas Sutro, argue that the DOL’s action directly contradicts both law and precedent, calling it “a textbook example of an arbitrary and capricious agency action” in violation of the Administrative Procedure Act.
According to the complaint, Morgan Stanley “lobbied the DOL extensively for over a year” and criticized a prior court ruling as “very sloppy.” That ruling had found that ERISA likely applied to the firm’s deferred compensation plan, giving brokers a legal basis to challenge the withholding of earned compensation after leaving the firm. The plaintiffs claim that the DOL, without notifying or consulting affected advisors, issued an opinion favoring Morgan Stanley despite knowing the firm intended to use it to defeat pending arbitration claims. Morgan Stanley declined to comment on the litigation, according to AdvisorHub.
Editor’s Note: Eccleston Law LLC is co-counsel for hundreds of former Morgan Stanley financial advisors nationwide suing in FINRA arbitration Morgan Stanley to recover their forfeited deferred compensation.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
