Credit Suisse
notched a multimillion-dollar legal victory in an ongoing series of disputes with some of its former advisors who claim they are owed millions in deferred compensation.
Credit Suisse Group AG bank
Stefan Wermuth/Bloomberg
The disputes stem from Credit Suisse’s decision to close its U.S. wealth management business in 2015, prompting the roughly 300 advisors it employed at the time to seek employment elsewhere. Advisors have said in litigation that they were effectively discharged and therefore are owed deferred compensation, which Credit Suisse disputes. The bank has been battling arbitration cases filed by dozens of its former employees.
The latest case to reach a conclusion pitted three former Houston-based Credit Suisse advisors against the Swiss bank. The advisors—Frank Hogan, Daryl Allen, and Langston Turner—accused the bank of violating labor laws, illegal forfeiture of earned compensation, failure to timely pay wages upon termination, breach of contract, and other alleged misconduct, according to a copy of the arbitration award. The trio moved from Credit Suisse to
UBS
in November 2015, according to BrokerCheck, a public database maintained by industry self-regulator Finra. They filed their arbitration claim in November 2016 and sought damages of at least $7 million.
Credit Suisse denied the allegations and made counterclaims of its own against the advisors, accusing them of breach of contract and other alleged misconduct, according to the arbitration award.
After the Houston-based panel held 25 hearing sessions last month, it sided with Credit Suisse, denying the advisors’ claims and ordering them to pay the bank a combined $3.8 million.
Arbitration panels are not required to explain their decisions, but in this case the arbitrators issued a terse statement alongside the award, saying they found “substantial evidence” that the advisors voluntarily resigned from Credit Suisse and that they received hiring bonuses from their new employer, UBS, that “more than fully compensate them for the loss of their Credit Suisse deferred compensation.”
“Unfortunately, the panel intentionally ignored the law. We are planning to appeal and are confident the ruling will be reversed,” Rogge Dunn, a Dallas-based attorney who represents the advisors, said in a statement.
Credit Suisse welcomed the victory. “This latest arbitration vindicates Credit Suisse’s position that no one is entitled to double-dip and be paid the same dollar twice,” a company spokesperson said in a statement. “We believe, as did this arbitration panel, that our position is correct as a matter of law and right as a matter of fair play in the marketplace.”
Though Credit Suisse won this arbitration case, it has lost others. For example, in December, a group of seven advisors won more than $6.3 million in an arbitration case against the company. The advisors had accused the firm of breach of contract, violations of labor law, and unjust enrichment, according to the arbitration award.
Credit Suisse has asked state and local courts to vacate some arbitration awards it lost, with partial success, according to court records.
