Credit Suisse Loses Another Broker Case - $11 Million and Counting

Credit Suisse has been ordered to pay two advisers $1.6 million finding that the firm wrongfully withheld deferred compensation owed to them. Five other cases went to awards this year, and arbitrators have awarded advisers more than $11 million in damages from Credit Suisse.

The claims stem from a ploy which Credit Suisse employed, in part, to keep the deferred compensation of brokers who it was effectively firing. Back in 2015 Credit Suisse decided to shut down its private banking operations, and announced a a transition agreement that lets Credit Suisse brokers move to Wells Fargo. Many brokers did not want to go to Wells, and given the fact that CS admitted that it was no longer going to run a retail business, brokers went to other firms.

Then CS turned around and claimed that the brokers who did not go to Wells broke their agreements with CS, and CS withheld their deferred compensation, which for many brokers was millions of dollars.

Not surprisingly, the brokers sued. And Credit Suisse is losing the arbitrations.

The problem is that brokers are only getting their own money back, and CS is not losing a dime, since it is being ordered to return the broker's own money. Plus, CS is keeping the deferred comp of every broker who did not sue.

But maybe that will change. Arbitrators can award interest at the New York pre-judgment interest rate of 9% per year. They can also award punitive damages for the outrageous abuse of its employees and the legal process, and depending on the details, they may be able to award attorneys fees.

If you have been denied compensation by Credit Suisse, give Mark Astarita a call at 212-509-6544

More Credit Suisse Defections - Advisors With $1.4B go to J.P. Morgan

We have been discussing this for weeks now - Credit Suisse and Wells Fargo made a mistake when they capped transition bonuses at 5 million dollars.

Now, maybe Wells Fargo entered the deal with Credit Suisse, knowing that it was not going to take any big producers, but that is doubtful. Producers with over a billion dollars under management are not going to accept a cap on the transition bonus of $5 million. JP Morgan and UBS know that, and are scooping up Credit Suisse brokers.

Today's latest defection, from IAG News

 "Two Credit Suisse teams managing over $1.4 billion in combined client assets passed on an offer to join Wells Fargo, choosing instead to move to J.P. Morgan, a spokeswoman acknowledged.

Credit Suisse and Wells Fargo struck a deal over a month ago, permitting the wirehouse to offer the Swiss firm's advisers up to 300% of their annual production to transition to Wells Fargo, according to people familiar with the matter. However, some advisers have been opting to join other the wirehouse competitors or more specifically, J.P Morgan Securities."

Some will argue that because of the way Credit Suisse structured the deal, brokers are giving up their deferred compensation. That might not be the case, depending on the details, but the simple fact is that these deals are negotiable, and firms will compensate brokers for the loss of deferred compensation.

The other question is why does Credit Suisse get to keep its employees' compensation when it decides to exit the business? Those deferred compensation dollars do not belong to Credit Suisse, it is compensation that is owed to the brokers, which was deferred based, at a minimum, that the firm was going to remain in business during the vesting period.

Brokers in transition, and brokers with deferred compensation issues should be contacting experienced securities attorneys to review their options. The attorneys at Sallah Astarita & Cox will provide a free consultation - call Mark Astarita at 212-509-6544 or email him at mja@sallahlaw.com


Advisors With $1.4B Leave Credit Suisse For J.P. Morgan 

Related articles

• Good Markets, More Broker Transitions 
• Brokers Not Buying the Credit Suisse Wells Fargo Deal
• Transition Agreements are Negotiable - Even for Credit Suisse Brokers
• Credit Suisse Brokers Losing Deferred Compensation
• Those Deals Really Are Negotiable! - Adviser Attrition at Barclays

Brokers Not Buying the Credit Suisse Wells Fargo Deal

That exclusive deal between Credit Suisse and Wells Fargo is not working out as planned. As advisers and their counsel examine the deal, and the transitioning adviser's options, the Wells Fargo deal has some significant issues.

Credit Suisse is shutting down its private banking operations and last month announced a transition agreement that lets Credit Suisse brokers move to Wells Fargo. We believe that many brokers will take advantage of the deal, if for no reason other than Credit Suisse has threatened to withhold their deferred compensation if they do not go to Wells Fargo.

However, large producers do not like the deal, since there is a cap of $5 million on transition bonuses. For producers who are generating 2-3 million in revenue, and with firms paying 2-3 times trailing 12 as an upfront loan, a five million dollar cap is obviously an issue.

Wells Fargo is attempting to address that concern by offering an additional $2.5 million in deferred compensation vesting over 4 years, but that might not be enough to lure the Credit Suisse brokers. Other firms have stepped into the void, including UBS which has been aggressively recruiting brokers.

Last week a Credit Suisse team left with $3.2 billion in assets and went to UBS. Today's defection goes to Morgan Stanley, as a team managing 5 billion dollars at Credit Suisse has joined Morgan Stanley in New York.

Related Posts:

Transition Agreements are Negotiable - Even for Credit Suisse Brokers

Credit Suisse Brokers Losing Deferred Compensation

---
Mark Astarita is a nationally known securities lawyer who has represented brokers and advisers in their transitions, loans and compensation issues for decades. He has negotiated deals, settlements and agreements with every major brokerage firm and dozens of regional firms. Mark has also represented brokers in disputes with every firm and does so in an efficient and cost effective manner. Call him for a free telephone consultation, and let’s see how I can help you. 212-509-6544 or email - mja@sallahlaw.com

Credit Suisse Brokers Losing Deferred Compensation

Wells Fargo Advisors (Photo credit: Wikipedia)

Deferred compensation – that form of pay that the firm gives to you, but makes you work for another 3 years to actually receive it.

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:

Transition Agreements are Negotiable - Even for Credit Suisse Brokers

Time to Ban Mandatory Deferred Compensation - Morgan Stanley Admits It Uses Employee Funds For Its Own Benefit

------
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.

Related articles

Transition Agreements are Negotiable - Even For Credit Suisse Brokers

In October of this year, Credit Suisse announced that it was closing its retail brokerage unit and that it had signed a recruiting arrangement with Wells Fargo. That arrangement lets Credit Suisse brokers who are hired by Wells Fargo to smoothly transition their practices and clients to the Wells Fargo Advisors arm by early next year.

That agreement seemed to be a welcome solution to the recruiting issues that arise when a large number of retail brokers changed firms, but that soon changed. Wells Fargo put a cap on the upfront loan, which traditionally has been 2-3 times trailing twelve. For some brokers, their upfront loans would be more than $5 million, which is where Wells Fargo set the cap.

That cap then starts to unravel the benefit of entering into the recruiting agreement, because the brokers are not bound to deal with Wells Fargo. Brokers complained, and since firms like  Merrill Lynch, Morgan Stanley and UBS do not impose such caps. Credit Suisse brokers were encouraged to discuss relationships with those firms.

Credit Suisse brokers need to keep in mind that they are not locked into any particular deal, even if they go to Wells Fargo. Despite popular opinion, all employment deals, including transition bonuses, upfront loans and hurdles are negotiable, as demonstrated by Wells Fargo decision to modify the upfront cap for brokers who are affected, and sometimes offering $2.5 million in new deferred compensation that vests over four years.

Related Stories:

Credit Suiss Advisors Free to Move to Wells Fargo

Wells Fargo and Credit Suisse strike recruiting deal for 250 advisers

Credit Suisse brokers not happy with move to Wells Fargo

Wells Fargo-Credit Suisse Deal: First FA Out Picks Merrill

Broker Dealers Move to Banking Fueling Transitions?

Advisors Have Leverage In Employment Agreements

Reviewing Broker Transition Agreements

--------------------
Mark Astarita is a nationally known securities lawyer who has represented brokers and advisers in their transitions, loans and compensation issues for decades. He has negotiated deals, settlements and agreements with every major brokerage firm and dozens of regional firms. Mark has also represented brokers in disputes with every firm and does so in an efficient and cost effective manner. Call him for a free telephone consultation, and let’s see how I can help you. 212-509-6544 or email - mja@sallahlaw.com

Credit Suiss Advisors Free to Move to Wells Fargo

Wells Fargo struck a deal with Credit Suisse to smooth the recruitment of the Swiss lender's private-bank employees as their firm retreats from managing wealth for U.S. clients.

The deal would allow U.S. advisors and clients to move to Wells Fargo Advisors by early 2016, according to a joint statement Tuesday from the firms.

Wells Fargo Reaches Agreement to Add Credit Suisse Advisors

---
Considering a move? All deals are negotiable. At all firms. Don't fall for the hype, you can get a better deal, and resolve your disputes with your prior firm. Call us today - 212-509-6544 - Sallah Astarita & Cox, a national securities law firm.

Related articles

• Good Markets, More Broker Transitions 
• DealBook News Analysis: In Credit Suisse Settlement, a Question of Justice

Credit Suisse CEO fights back on tax evasion claims

Credit Suisse CEO fights back on tax evasion claims - http://pulse.me/s/RYmCy