Credit Suisse moves to block broker's lawsuit for back pay
Credit Suisse asked a federal judge to dismiss a broker's class action lawsuit seeking up to $300 million in back pay that is allegedly owed to more than a hundred former Credit Suisse advisors.
It's the latest flare-up in a lengthy dispute between Credit Suisse and its former U.S.-based brokers, stemming from the manner in which the Swiss bank exited the U.S. marketplace in 2015.
Instead of selling its American wealth management unit to another firm, Credit Suisse announced it was shutting the business and entered into an exclusive recruiting arrangement with Wells Fargo. Credit Suisse advisors were permitted to move to Wells Fargo unhindered and offered recruiting deals by Wells Fargo to do so. Those who opted to join other firms were restricted from receiving deferred compensation they had earned at Credit Suisse. Fewer than half of the bank's roughly 250 brokers ultimately joined Wells Fargo.
Christopher Laver, who brought the class action lawsuit against Credit Suisse, went to work for UBS. He had been employed by Credit Suisse for 13 years.
In his lawsuit filed in federal court in California's Northern District in February, Laver says the firm's contracts stipulate that brokers are owed deferred compensation unless they are fired or voluntarily resign.
"Simply put, the plaintiff here is looking to be paid the same money twice," a spokeswoman for the Swiss firm says.February 13
The Swiss firm alerted brokers that they may take their disputes to FINRA instead of resolving them in a private forum set up by the company.September 12
Credit Suisse maintains that advisors such as Laver who did not join Wells Fargo voluntarily resigned from the firm and thereby gave up their deferred compensation.
Laver contends that he and other brokers did no such thing: By shuttering its U.S. brokerage unit, Credit Suisse forced the advisors to find work elsewhere. Moreover, he claims Credit Suisse benefited from years of revenue produced by its U.S.-based brokers.
"The deferred compensation at issue here was earned and is owed. Credit Suisse should not be able to avoid its obligation to compensate the advisors fully and fairly by claiming they 'resigned' when, in fact, Credit Suisse simply ceased operating this business," Laver says in his lawsuit.
Laver's attorney could not be reached for additional comment.
In its request for dismissal of the lawsuit, Credit Suisse argues that Laver's employment contract mandates any disputes be arbitrated and, furthermore, that he annually waived his right to file a class action lawsuit.
"Even if the [firm's Employment Dispute Resolution Program] were deemed to be invalid (which it is not), plaintiff would still be required to arbitrate his claims against [Credit Suisse] under FINRA’s rules and regulations," the firm argues.
A spokeswoman for Credit Suisse says allegations that the firm is wrongfully withholding deferred pay have no merit and that advisors who decided not to join Wells Fargo and instead went to other firms received recruiting bonuses to do so. "Simply put, the plaintiff here is looking to be paid the same money twice. Credit Suisse will vigorously defend the action," the spokeswoman says in an emailed statement.
Credit Suisse is also seeking to change the venue for hearing the dispute from California to New York, arguing that Laver's employment contract specifies that any dispute arising from his employment at the firm is to be mediated there.
Credit Suisse is in fact involved in a number of arbitration disputes as other former brokers attempt to win back deferred compensation the firm is withholding from them. The bank tried to compel these advisors to arbitrate those disputes in a private forum, but FINRA sent a notice to the industry asserting all advisors have a right to take any dispute between themselves and a member firm to FINRA's arbitration forums.
Class action claims cannot be arbitrated under FINRA rules, meaning advisors will have to have their cases heard one by one.