A Finra arbitration panel has ordered Credit Suisse to pay two of its former brokers $6.4 million over deferred compensation, according to news reports.
Joseph Lerner and Anna Winderbaum left Credit Suisse in 2015 for Morgan Stanley, two months after the Swiss bank opted to get out of U.S. wealth management and signed a recruiting deal with Wells Fargo, InvestmentNews writes.
In 2017, the pair —who’s now on a team overseeing $2.2 billion at Morgan Stanley, according to Barron’s — filed a claim seeking $3.6 million in compensation from Credit Suisse, InvestmentNews writes.
The Finra arbitration panel awarded Lerner and Winderbaum $2.8 million in compensatory damages, but that was doubled automatically under New York state’s “liquidated damages” provision, according to the publication. The panel also ordered Credit Suisse to pay the pair $836,000 in interest and cover $250,000 in legal fees, InvestmentNews writes.
Credit Suisse did pay deferred compensation to brokers who joined Wells Fargo but has said that those who went elsewhere aren’t entitled to it as they left voluntarily, and were in any case made whole if they received signing bonuses from other firms, according to the publication.
A spokeswoman for the firm says it believes the arbitrators’ decision in the most recent case is flawed because “it ignores the governing contracts and the industry standard ’make whole’ process under which proper financial incentives are maintained and the economic interests of employees are protected,” according to InvestmentNews.
"We continue to believe that no one is entitled to receive the same dollar twice, and we will continue to defend our bank against meritless attempts to do so, as we have in many other proceedings where former brokers have abandoned such claims," Karina Byrne tells the publication.
Credit Suisse has faced numerous deferred compensation claims from its former U.S. brokers since 2015. In January, the company filed a petition to reverse a $1 million deferred compensation award Finra made to a broker currently with UBS.
In June, Credit Suisse scored a major victory when a judge in San Francisco dismissed a $300 million class action lawsuit over deferred pay.