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June 25, 2018

Credit Suisse wins $300m broker compensation case

A federal judge in the US has dismissed a lawsuit that accused Credit Suisse of withholding up to $300m of compensation from brokers following the closure of the bank’s 275-broker private banking arm in 2015.

According to a report by Reuters, the proposed class-action suit was filed by former Credit Suisse employee Christopher Laver earlier this year in the U.S. District Court in San Francisco and sought compensation for around 200 brokers.

The move followed Credit Suisse’s decision to sign a recruiting pact with Wells Fargo after the closure of its private banking unit.

Laver said that the Swiss bank failed to offer the deferred compensation to those brokers who did not join Wells Fargo under the recruiting agreement and asserted that those brokers resigned voluntarily.

According to Laver, the bank deliberately agreed to the recruiting deal rather than selling the unit as a formal sale would have led to a change of control requiring the payments.

He said that Credit Suisse already had the knowledge of several brokers unwilling to join Wells Fargo owing to the latter’s difference in business and client base.

The judge William Orrick dismissed the case saying that Laver was bound by an arbitration agreement and so could not pursue his proposed class action, and that arbitration details should be worked out in New York.

Moreover, Credit Suisse said that as a standard practice, brokerages such as Well Fargo always pays the deferred compensation on rehiring an employee.

“Plaintiffs cannot be paid the same money twice,” Credit Suisse spokeswoman Karina Byrne said.

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