Brokers Sue Finra, Credit Suisse over Arbitration Shopping
In a scenario that Kafka might have created had he ever thought about the retail brokerage industry, nine advisors in Chicago have sued the Financial Industry Regulatory Authority in an attempt to have it declare its authority in arbitrating disputes between them and their former employer.
The spark for the suit, filed in Illinois state court on Friday, was a “blizzard” of previously unreported correspondence that Credit Suisse Securities (USA) sent to former brokers in mid-May seeking return of alleged overpayments they collected before they moved to other firms and/or payment due on promissory notes, according to Nicholas Iavarone, a lawyer for the brokers.
The disputes follow Credit Suisse’s decision last year to shutter its U.S. brokerage operations and steer its approximately 250 advisors to Wells Fargo Advisors. When scores of brokers went to rivals, it withheld deferred compensation they had accumulated and filed a raiding complaint against UBS’s U.S. broker-dealer.
In Texas, meanwhile, another lawyer representing 15 former Credit Suisse advisors said his clients also have tired of waiting for Finra.
“I’ve filed six suits, three in Houston and three in Dallas, to have my clients’ disputes resolved exclusively through a Finra arbitration because it doesn’t look like Finra is going to act on this anytime soon,” said Rogge Dunn, an employment lawyer at Rogge Dunn Group in Dallas. His clients now work at UBS, Merrill Lynch and even Wells Fargo Advisors, he said.