Former Credit Suisse Broker Files Class-Action to Collect Deferred Stock
A former Credit Suisse broker in San Francisco has brought a class-action lawsuit against the bank seeking hundreds of millions of dollars of deferred stock he claims was withheld from him and other brokers who did not move to Wells Fargo Advisors after the Swiss bank shuttered its U.S. broker-dealer operations.
Christopher Laver, who joined UBS Financial Services in 2015 after working for 13 years at Credit Suisse Securities (USA), alleges that Credit Suisse deliberately arranged a recruiting deal with Wells rather than an outright sale to avoid triggering a change-of-control in brokers’ employment agreements that would have accelerated deferred compensation payments. Brokers who joined Wells collected their deferred shares.
The lawsuit, filed Wednesday in federal district court in San Francisco, also alleges that many brokers turned down offers from Wells Fargo out of concern over its ability to serve their customers.
“Wells Fargo was incapable of and/or ill-suited to handle certain significant portions of Credit Suisse advisers’ business, and Wells Fargo maintained a different type of client base than Credit Suisse advisers,” the lawsuit says. “At the time it entered into the ‘recruiting agreement’ with Wells Fargo, Credit Suisse knew and expected that many of the Credit Suisse financial advisers would not and/or could not work for Wells Fargo.”
The case supplements dozens of arbitration claims that former Credit Suisse brokers have filed to collect back pay, and to avoid repaying balances on promissory notes that the bank is demanding.
Credit Suisse has asserted that it is entitled to keep the deferred compensation, which the lawsuit says may be as much as $300 million, because the brokers “resigned” rather than join Wells Fargo.
Karina Byrne, a Credit Suisse spokeswoman, said that if they had accepted Wells purported offers they would have received all their deferred pay. She also contested the lawsuit’s allegation that a change of control would have triggered accelerated awards of the deferred shares.
“Those who chose not to accept those offers had negotiated equally or more lucrative compensation packages from competing institutions that also covered the same contingent deferred compensation at issue here, consistent with standard industry practice,” she wrote in an e-mail. “Simply put, the plaintiff here is looking to be paid the same money twice.”
About one-third of Credit Suisse’s 336 U.S. brokers joined Wells Fargo in late 2015 and early 2016, with another 101 joining UBS, according to documents reviewed by AdvisorHub. Wells Fargo officials said during the recruiting period that it was not interested in hiring all of the Credit Suisse brokers. (Credit Suisse, meanwhile, has has filed a raiding complaint against UBS.)
The putative class-action lawsuit was made on behalf of brokers with unvested compensation awards who were effectively “terminated” between Oct. 20, 2015 and March 31, 2016, because their “private bank” went out of business, according to the lawsuit.
Robert Nelson, a lawyer representing Laver, said the class likely includes more than 200 people.
Byrne said Credit Suisse will “vigorously defend” itself against the lawsuit.
Separately, dozens of Credit Suisse brokers who have joined Wells Fargo are grousing that the bank has reneged on promises of getting near-exclusive access to Credit Suisse retail syndicate deals for their clients.