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January 06, 2022 at 11:18 AM
What You Need to Know
- Seven former Credit Suisse Securities brokers accused the firm of failing to pay deferred comp after it shut down its U.S. brokerage business in 2015.
- The panel ordered the firm to pay a total of $5.2 million in compensatory damages.
- Credit Suisse says the decision conflicts with a recent court ruling.
A Financial Industry Regulatory Authority arbitration panel ruled that Credit Suisse must pay a group of seven former brokers of the firm a total of $5.2 million in compensatory damages, plus interest, legal fees and other costs.
The company’s ex-brokers had alleged the firm breached its obligations to them by not paying deferred compensation after Credit Suisse shut down its U.S. brokerage business in 2015.
The FINRA panel, made up of two public arbitrators and one industry arbitrator, ordered the firm to pay, in addition to the compensatory damages, 10% interest on those damages for each year since their dates of departure from Credit Suisse in 2015.
The firm must also pay $1.1 million in attorneys’ fees, over $120,000 in hearing session fees, and $86,000 in other costs, according to the decision that was posted on FINRA’s website on Dec. 23.
The brokers were “very satisfied with the award,” Barry Lax of Lax & Neville in New York, the brokers’ attorney, told ThinkAdvisor on Thursday. “I think the award comes out to almost $10 million” when you factor in the interest over the past six years, he said, calling that a “tremendous component” of the award.
In November, Lax represented another group of ex-Credit Suisse brokers in a deferred compensation dispute that ended with a $9 million award for the brokers and his firm had won a combined $30 million in damages from Credit Suisse in seven deferred compensation disputes, he said.
In each of the seven cases, his firm’s clients won their deferred compensation, he noted, adding there are claims by at least 15 more brokers still pending for his firm and even more deferred compensation disputes involving Credit Suisse and its ex-brokers still pending overall.
Credit Suisse Responds
“The finding in the case at issue here is directly contrary to the most recent appellate court decision which found that the contingent incentive compensation at issue is not a wage under the law,” a Credit Suisse spokesperson told ThinkAdvisor on Wednesday.
