Credit Suisse Wins $300 Million Brokerage Case

Tom Burroughes Group Editor 22 June 2018

Credit Suisse Wins $300 Million Brokerage Case

The lawsuit was brought from US-based brokers when the lender shut its private banking unit in the country more than two years ago.

A US federal judge has thrown out a lawsuit against Credit Suisse accusing it of withholding as much as $300 million in compensation from US-based brokers when the Swiss bank shut the private banking unit in 2015.

"We are pleased that the judge has dismissed this case against us, vindicating our position in full.  Simply put, these allegations are false and plaintiffs cannot be paid the same money twice," a spokesperson for the bank told Family Wealth Report.

In October 2015, the lender agreed to shift its US private banking relationship managers and clients to Wells Fargo’s advisory business. It also announced plans for a partial share float of a 20 to 30 per cent stake in its Swiss universal banking unit by the end of 2017, and to have a greater focus on emerging markets, especially Asia.

In  yesterday’s ruling, as reported by Reuters, US District Judge William Orrick in San Francisco ruled that the plaintiff Christopher Laver was bound by an agreement to arbitrate employment-related disputes, and could not pursue his proposed class action on behalf of roughly 200 brokers. The judge also said that any arbitration details should be worked out in New York, where Credit Suisse thought the case belonged. The news service said a lawyer for Laver did not immediately respond to requests for comment. Credit Suisse said it was pleased with the decision.

Laver had sued on behalf of brokers who refused or claimed they were unable to move to Wells Fargo & Co, which was given exclusive recruiting rights when Credit Suisse shut the 275-broker private banking unit.

He said Credit Suisse’s decision to enter a “recruiting agreement” with Wells Fargo, rather than formally sell the unit and trigger payouts, enabled the Swiss bank to mistreat brokers by claiming they had all voluntarily resigned. Credit Suisse, however, has said it was standard industry practice for brokerages such as Wells Fargo to pay the deferred compensation at issue to new hires.


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