Two star brokers at Morgan Stanley won a stunning $6.4 million arbitration award against their old firm, Credit Suisse Securities, claiming they did not receive deferred compensation they were entitled to after the firm closed down its U.S. brokerage operation.
The two financial advisers, Joseph T. Lerner and Anna S. Winderbaum, left Credit Suisse in 2015, according to their BrokerCheck profiles. They filed their claim in 2017, seeking $3.6 million, or the amount equal to unpaid deferred compensation, according to the arbitration award,
which was released on Tuesday by the Financial Industry Regulatory Authority Inc.
The three-person Finra arbitration panel awarded close to $2.8 million in compensatory damages, which was doubled under a New York state provision called "liquidated damages," and $836,000 in interest, according to the award. The arbitration panel also ordered Credit Suisse to pay $250,000 in legal fees.
Mr. Lerner and Ms. Winderbaum are part of a team at Morgan Stanley with $2.2 billion in assets,
according to Barron's Magazine. Both have been named to Barron's top financial adviser list for New York State.
Wells Fargo
said in October 2015 that it struck a recruiting arrangement with Credit Suisse after the Zurich, Switzerland-based bank decided to exit its U.S. private banking business. Two months later, Mr. Lerner and Ms. Winderbaum left for Morgan Stanley.
Their attorney, Barry Lax, said this was the third claim he had filed on behalf of former Credit Suisse advisers, with awards, including this claim, totaling close to $9 million.
He said that liquidated damages occur in cases under New York State labor law that allows claimants double damages in such disputes.
"Any time you get liquidated damages it's a big award," said Mr. Lax. "Like a lot of the other financial advisers who worked at Credit Suisse, my clients made the argument they were owed deferred compensation, and the arbitration panel found that they were owed the deferred comp. And if the employer does not pay the employees the compensation they are owed, you owe them liquidated damages."
Credit Suisse was displeased with the award.
"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," said Credit Suisse spokeswoman Karina Byrne. "We believe this recent decision is flawed, as 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."
Credit Suisse paid deferred compensation to its former brokers who went to work for Wells Fargo, but has maintained those who joined other firms left Credit Suisse voluntarily and are not entitled to deferred compensation. In addition, the firm claimed that brokers signing with new firms received signing bonuses that made them whole.
