U.S. Markets

Credit Suisse kept $300 million from brokers in closed U.S. unit: lawsuit

(Reuters) - A new lawsuit accuses Credit Suisse Group AG of withholding up to $300 million of pay from U.S.-based brokers who refused or were unable to move to Wells Fargo & Co after their private banking unit was shuttered in 2015.

A logo of Credit Suisse is pictured on a building in Geneva, Switzerland, November 8, 2017. REUTERS/Denis Balibouse

In a complaint filed on Wednesday, Christopher Laver said Credit Suisse canceled deferred compensation owed to him and other brokers who did not join Wells Fargo under a “recruiting agreement” between the banks, by maintaining a “facade” that they had voluntarily resigned en masse.

Laver said Credit Suisse knew many brokers would not join Wells Fargo because its business and client base were different but entered the recruiting pact because a sale of the unit would have constituted a “change of control” requiring the payments.

“Credit Suisse should not be able to avoid its obligation to compensate the advisers fully and fairly by claiming they ‘resigned’ when, in fact, Credit Suisse simply ceased operating this business,” the complaint said.

Laver lives near San Francisco, worked at Credit Suisse for 13 years and has worked for another Swiss bank, UBS, since leaving. He has been in financial services since 1981.

The proposed class-action complaint filed in the U.S. District Court in San Francisco seeks unspecified damages for roughly 200 brokers.

Credit Suisse spokeswoman Karina Byrne the lawsuit had no merit and that it is “standard industry practice” for Wells Fargo and other brokerages to pay the deferred compensation at issue to new hires.

“Simply put, the plaintiff here is looking to be paid the same money twice,” she said.

Wells Fargo is not a defendant and was not accused of wrongdoing.

Credit Suisse awarded Wells Fargo the exclusive right to recruit its brokers on Oct. 20, 2015. It told its roughly 275 brokers in 13 U.S. offices that the business was too small to compete without significant investment or acquisitions.

In addition, “they were told if you went to Wells you could keep your deferred compensation, and if not you were out of luck,” Robert Nelson, a lawyer for Laver, said in an interview.

Wells Fargo is based in San Francisco. Its retail brokerage recently had 14,544 financial advisers and $1.7 trillion of client assets, and its wealth management business recently had $248 billion of client assets.

The case is Laver v Credit Suisse Securities (USA) LLC, U.S. District Court, Northern District of California, No. 18-00828.

Reporting by Jonathan Stempel in New York and Brenna Hughes Neghaiwi in Zurich; Editing by Susan Thomas and Cynthia Osterman