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| Wells Fargo Advisors (Photo credit: Wikipedia) |
Everyone in the brokerage industry is familiar with deferred compensation. It was originally designed to help employees lower their tax burden by spreading holding compensation until later years, with presumably lower tax rates. However, the brokerage industry figured out that they could add a vesting period to that compensation, so that while you worked and earned the money, the compensation was deferred, and you had to wait until it “vested” – a period of years.
Credit Suisse is now playing a game with their employee’s compensation. As part of the deal with Wells Fargo, if a broker does not go to Wells Fargo, Credit Suisse will consider her to have voluntarily resigned, and therefore forfeit her deferred compensation. Reports are that there is $400 million in deferred compensation at risk, which goes to Credit Suisse if not paid to the employees.
Let’s review. Credit Suisse cannot profitably run a brokerage firm. It decides to shut down that business. Rather than attempt to sell the business, it enters into a recruitment agreement with Wells Fargo, where it gets a percentage of revenue generated by every representative who goes to Wells. And if they don’t go to Wells, Credit Suisse keeps their deferred compensation.
Nope, sorry, that is not the way it works. Deferred compensation is the property of the employee, and the employer does not get to take it back because it doesn’t have the skill set to run the business.
Credit Suisse brokers need to call my office. You are getting screwed.
Call me - 212-509-6544
Related Articles:
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Time to Ban Mandatory Deferred Compensation - Morgan Stanley Admits It Uses Employee Funds For Its Own Benefit
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Mark Astarita is a nationally recognized securities lawyer who has spent the past 25 years representing brokers and financial advisers across the country in their disputes with their firms. He can be contacted by email at mja@sallahlaw.com or by phone at 212-509-6544.
Mark Astarita is a nationally recognized securities lawyer who has spent the past 25 years representing brokers and financial advisers across the country in their disputes with their firms. He can be contacted by email at mja@sallahlaw.com or by phone at 212-509-6544.
