FINRA Arbitration Panel Orders Credit Suisse to Pay Former Advisor More Than $844,000 in Deferred Compensation
From the Desk of Jim Eccleston at Eccleston Law LLC:
A FINRA arbitration panel has ordered Credit Suisse to pay an advisor more than $844,000 in unpaid deferred compensation accruing until 2015 when the firm shuttered its U.S. wealth management unit.
Credit Suisse had signed an exclusive recruiting arrangement with Wells Fargo. Under the deal, Credit Suisse advisors were allowed to move their practice to Wells Fargo and still be able to maintain their rights to any unvested deferred compensation. However, under the deal, if a Credit Suisse advisor chose not to move to Wells Fargo and instead joined a competitor, his or her deferred compensation would be forfeited.
In this particular arbitration case, the advisor did not join Wells Fargo and instead joined Morgan Stanley immediately after Credit Suisse halted its wealth management practice. The advisor filed an arbitration claim against Credit Suisse to collect unpaid deferred compensation owed to him.
In its decision, the arbitration panel sided with the advisor and ordered the explanation for termination on his Form U5 changed to “terminated without cause.” Moreover, by changing the advisor’s Form U5 to reflect that he was terminated without cause, the advisor’s deferred compensation then would automatically vest.
The arbitration panel explained in its decision that, despite providing the advisor with an option to go to Wells Fargo, Credit Suisse breached its contract and was unjustly enriched for keeping the advisor’s deferred compensation.
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