IRVINE, Calif. — Smith Barney reps are wondering when they’ll get their payments from the wage-and-hour lawsuit the firm agreed to settle in May 2006 for $98 million.
IRVINE, Calif. — Smith Barney reps are wondering when they’ll get their payments from the wage-and-hour lawsuit the firm agreed to settle in May 2006 for $98 million.
Be patient, the firm told them in a memo last month.
In the note to branch managers, Eugene Clark, a lawyer for the New York-based brokerage unit of Citigroup Inc., said broker claim forms might go out this month, and if all goes smoothly in the legal process, reps who submit a claim could get paid by late November or December.
Members of the class still could file objections to the proposed settlement, which could delay ultimate payment, he said.
“Smith Barney does not have control over the timing of these steps or the outcome,” Mr. Clark said.
The memo said that a proposal on how to allocate the settlement funds across states was made by a court-appointed referee in April and that a hearing on the plan was scheduled for last month.
Calls to a Smith Barney spokesman and the plaintiff’s lawyer in the case, Mark Thierman of the Thierman Law Firm in Reno, Nev., were not returned.
“Nobody knows what [the payment formula] is,” said one rep
at the firm who asked not to be identified.
This broker has heard that payments could be based on how much a rep has paid for such expenses as trading errors or state registrations.
Smith Barney brokers have been wondering about the payments, which would help placate some sore feelings about pay changes the firm implemented this year.
Smith Barney went to a flat 20% payout on the first $5,000 of monthly gross and trimmed its grid at some levels by 1 percentage point.
In return, it picked up some costs reps had been paying, including sales assistant bonuses this year, and added a company-funded expense account.
The changes were made to comply with state labor laws and terms of the settlement, the firm said at the time.
So far, Smith Barney is the only firm to have made pay changes in response to a wage-and-hour claim.
Industry observers expect other firms, such as Merrill Lynch & Co. Inc. and UBS Financial Services Inc., both of New York, and A.G. Edwards & Sons Inc. of St. Louis, also to revamp compensation policies.
In a separate memo last month, Sallie Krawcheck, who oversees Smith Barney as Citigroup’s head of global wealth management, said she wanted to simplify the brokerage unit’s pay plan.
“While these changes were well intentioned, they have resulted in a compensation plan that is, frankly, too complicated,” she said.
Ms. Krawcheck was tapped for her current post in January, replacing Todd Thomson.
