Judge Denies Credit Suisse’s Move to Vacate Deferred Comp Award

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A New York judge has rejected Credit Suisse’s attempt to overturn an arbitration award of $975,531 to Nicholas B. Finn, one of scores of former brokers who sued for some $245 million of back pay when the Swiss bank shuttered its U.S. brokerage operations in 2016.  

Employment law attorneys for Finn and other brokers whose arbitration cases are pending applauded the decision from New York State Supreme Court Judge Jennifer Schecter on April 24. But they said the bank’s attempt to prolong the Finn litigation with its rare petition in January to vacate his award was part of a continuing strategy to intimidate former brokers and existing Credit Suisse employees..

“They are trying to make it as expensive as possible, trying to push hearings out as many days as possible, trying to push out the results as many days as possible,” said Brian Neville, whose New York firm of Lax and Neville represents Finn. “It is one of the largest acts of employment corporate greed that I’ve seen.”

A Credit Suisse spokeswoman declined to comment on his remarks and on whether the bank will appeal the judge’s decision. But she reiterated the bank’s arguments that brokers suing for deferred awards are double-dipping because they typically negotiate signing bonus agreements with their new employers that cover awards left behind.  

“We continue to believe that no one is entitled to recover the same dollar twice and we will continue to pursue our position in arbitration or in court,” she said on Friday. “We note that many claimants have opted to drop such claims, admitting that they were not entitled to any double recovery.”

After announcing in late 2015 that it planned to close its U.S. “private bank” operations, Credit Suisse encouraged brokers to join Wells Fargo Advisors, which had agreed to pay a finders’ fee for successful placements. Only about one-third of the Swiss bank’s “relationship managers” took the suggestion, according to a document reviewed by AdvisorHub. UBS recruited 101 of the brokers, including Finn, and is being sued in an ongoing raiding case by its Swiss competitor.

Finn was heavily courted by senior executives of UBS and of Wells Fargo, and UBS offered “more than the deferred awards that he claims…for the very purpose of making him whole,” Credit Suisse said in a law memo from its attorneys at Dewey Pegno & Kramarsky LLP that the New York lower court in January declined to seal.

The court did not grant Finn attorneys’ fees, and the 9% interest on his near $1-million award that accumulates from the November 2018 arbitration award date until Credit Suisse pays it will not cover the cost of the vacature procedures, said Sandra Lahens, a lawyer at Lax and Neville.

Finn did not return a call for comment left with another former Credit Suisse adviser at their UBS office in New York City.

Credit Suisse has lost two of the three deferred compensation arbitration cases decided to date, including the Finn award iand an $845,000 award in October to a Boston broker who now works at Morgan Stanley.

But the Swiss bank prevailed earlier this month in turning back a $2.2 million claim from a Texas broker who joined Wells, and was awarded the balance he owed on his promissory notes. Fourteen other former Credit Suisse brokers have voluntarily withdrawn their deferred compensation claims, the bank said in filings unsealed in the Finn case.

Scores of other brokers continue to press their cases in Finra arbitration. They generally claim breach of their employment contracts, arguing that their deferred stock-based awards should have vested under involuntary termination clauses that were triggered when Credit Suisse shut its U.S. brokerage business. Some are also claiming fraud, which Credit Suisse termed “ludicrous” in court papers unsealed in the Finn hearings.

Petitions to vacate arbitration decisions are rare, and courts under federal law can grant them only for procedural reasons or for blatant misconduct by arbitrators.

Credit Suisse Securities (USA) argued that the three arbitrators in the Finn case demonstrated a “manifest disregard of the law” by refusing to reschedule a hearing to accommodate testimony from Philip Vasan, the former head of its U.S. brokerage business, and by prohibiting “evidence of [Finn’s] negotiations with potential employers” to compensate him for money left behind.

“Credit Suisse is intentionally making all of these arbitrations into Bataan death marches to try to prevent more FAs [financial advisors] from making claims,” said Rogge Dunn, a Dallas, Tex.-based employee lawyer who represents some of the brokers seeking deferred comp and who has practiced for more than 30 years.

“Its scorched-earth tactics are the most aggressive litigation by an investment bank or wirehouse that I’ve seen.”

The Credit Suisse spokeswoman declined to comment.