Four former Merrill Lynch brokers in Chicago are pressing their ex-employer, now owned by Bank of America Corp., to pay about $3 million in compensation they argue is owed to them.
Four former Merrill Lynch brokers in Chicago are pressing their ex-employer, now owned by Bank of America Corp., to pay about $3 million in compensation they argue is owed to them.
The brokers filed in Chicago for arbitration of their dispute, says Tom Leahy, an attorney at Chicago law firm Leahy & Hoste, which is representing the brokers.
The brokers left Bank of America in November 2008 over concerns that the terms of their jobs would change after the September 2008 announcement that Bank of America would acquire Merrill, he says.
Bank of America asked Merrill brokers to agree to accept personal loans under a program that would write off the IOUs within seven years if a broker stayed with the company.
But the agreement also required brokers to waive their right to get deferred compensation even if they left the company for “good reason,” Mr. Leahy said. If the brokers didn't sign up for the loans, they would be cut off from receiving coveted accounts redistributed when other brokers left the company, he says.
“Our people said ‘it looks bad and it smells bad,' ” Mr. Leahy said. The brokers declined to comment.
A Bank of America spokesman declined to comment on the case.
When the Chicago brokers left Bank of America, without signing up for the loan program, they demanded the bank follow through on Merrill promises to pay them deferred compensation earned under bonus programs.
The bank contended the brokers forfeited the deferred compensation because they didn't leave the company for “good reason,” according to Mr. Leahy.
The brokers countered that the change of control qualified as a “good reason,” Mr. Leahy said. In addition, their decision not to sign onto the loan program would have kept them from receiving the redistributed accounts, creating another “good reason” to exit, he said.
Two brokers who took the bank to arbitration on a similar issue in Florida won a $1.17-million award last month.
The Bank of America spokesman noted that the Florida arbitration panel didn't give those brokers as much money as they demanded and denied a request for punitive damages and payment of the brokers' attorney fees.
The Chicago cases are expected to be taken up as early as next month, Mr. Leahy said.
This story originally appeared in Crain's Chicago Business, a sister publication of InvestmentNews
