Credit Suisse will pay a former broker about $3.4 million for the way the firm handled his discharge back in Oct. 2015 when it closed its advisory business, a Finra filing said.
The Finra arbitration award found Credit Suisse owed David Barnes $1.65 million in compensatory damages plus 5% interest per year from Jan. 2016 through the date of the award, $500,000 in attorneys’ fees, the voiding of promissory notes worth roughly $680,000, $20,000 in sanctions and $20,000 in hearing costs.
Barnes’ attorney, Rogge Dunn of Rogge Dunn Group in Dallas, said the award was particularly gratifying because it included the $20,000 in sanctions and dismissed Credit Suisse’s counterclaim that Barnes owed the outstanding balance of a promissory note.
“The takeaway to Wall Street firms is that Finra arbitrators are not afraid to hold firms accountable and award big numbers when they mistreat advisors, including voiding a promissory note,” he said. “To totally throw out a prom note is rare.”
A Credit Suisse spokesperson commented on the award with a written response, stating "[T]he fact that one of the three arbitrators dissented from awarding Barnes any relief at all strengthens our belief that this award still runs afoul of established law.”
In Oct. 2015, Credit Suisse employed 292 brokers as financial advisors in its U.S. wealth management team when it decided to get out of that part of the business. Lawyers who have since represented many of those brokers in Finra arbitrations have said that Credit Suisse told them they had to voluntarily resign in order to avoid paying out some $240 million in deferred compensation. Those “voluntary resignations” ended up on the brokers’ Form U5.
So far, one lawyer said earlier this year, Finra arbitrators have agreed that one cannot be told to voluntarily resign and have found in the advisors’ favor.
Dunn said he has two more cases coming up with former Credit Suisse brokers over the same issue.
Barnes filed his claim in Aug. 2016, asserting, among other things, wrongful discharge, constructive discharge, forfeiture of deferred compensation in violation of ERISA laws, illegal forfeiture of vested, unvested and earned compensation, failure to timely pay wages upon termination and waiting time penalties, unfair competition, breach of the duty of good faith and fair dealing, fraud, breach of fiduciary duty, breach of contract regarding promissory note(s) and breach of contract, according to the filing.