On October 12, 2010, a Financial Industry Regulatory Authority ("FINRA") arbitration panel in Florida awarded $1,167,000 to two former Merrill Lynch, Pierce, Fenner & Smith, Inc. ("Merrill Lynch") brokers for deferred compensation benefits that Merrill Lynch had refused to pay to the brokers. The brokers had claimed that their deferred compensation should have vested and been paid to the brokers when they left Merrill Lynch after Bank of America acquired Merrill Lynch in September 2008.
This is believed to be the first arbitration award in the country that awarded immediate vesting and payment of deferred compensation benefits as a result of Bank of America's takeover of Merrill Lynch. This award may foreshadow future arbitration awards against Merrill Lynch in favor of other brokers who also left the brokerage firm after the Bank of America takeover.
Merrill Lynch's deferred compensation plans provided that a broker's deferred compensation benefits would immediately vest and be paid in cash to a departing broker if a broker resigned for "Good Reason." Merrill Lynch's deferred compensation plans included in their definitions of "Good Reason," a change in control resulting in detriment to the departing broker's compensation, benefits, or position. According to the two former Merrill Lynch brokers, they suffered detriment to their compensation, benefits, or position after the 2008 change in control from Merrill Lynch to Bank of America. As a result, they quit their employment with Merrill Lynch, expecting that their deferred compensation would vest and be paid to the brokers in cash. But Merrill Lynch refused to vest the brokers' deferred compensation or to pay those benefits in cash.
The FINRA arbitration panel held that Merrill Lynch's failure to vest the brokers' deferred compensation benefits immediately and to pay to the benefits to the brokers in cash was in breach of those brokers' employment contracts. The arbitrators awarded damages of $587,126 to one broker, and $580,220 to the other.
It is believed that there is between $100 million and $300 million in deferred compensation that should have vested and should have been paid to brokers who departed for "Good Reason," but that Merrill Lynch has refused to pay.
If Merrill Lynch has wrongfully withheld your deferred compensation, contact an employment lawyer at Dimond Kaplan & Rothstein, P.A. for a free case evaluation.
