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Merrill Lynch Settles Class Action Broker Compensation Suit

On August 14, 2012, nearly two years after the commencement of a class action lawsuit seeking the reimbursement of deferred compensation by thousands of former brokers of the Bank of America Corporation’s (“Bank of America”) Merrill Lynch & Co. (“Merrill Lynch”) unit, a formal disclosure was filed with the United States Securities and Exchange Commission (“SEC”) stating that the parties have finally “reached an agreement in principle” to settle the class action suit. On August 24, 2012, just over one week after this announcement was made, the class participants asked United States District Court Judge Alison Nathan to approve a $40 million settlement. This settlement, which is still pending the Judge Nathan’s approval, has been purported to compensate more than 1,400 of the aggrieved brokers participating in the suit. The basis giving rise to the broker’s claims for deferred composition is the direct result of Merrill Lynch’s merger agreement with Bank of America in September, 2008, which caused nearly 3,300 brokers to depart from the firm. After the merger was effectuated, many of the departing brokers placed a formal request with Merrill Lynch for the disbursement of their duly owed deferred compensation. However, Merrill Lynch was aggressive in addressing these claims. Generally, deferred compensation is payable to a broker once the broker has stayed with the firm for a specified number of years. Brokers are also entitled to their deferred compensation in the event that they discontinue their employment with the firm for a “good reason.” The brokers participating in this class action cite Merrill Lynch’s merger with Bank of America as a “good reason.” In addition to this class action, Merrill Lynch not only faces claims from more than 1,000 brokers in the Financial Industry Regulatory Authority’s (“FINRA”) arbitration forum, but it has also already lost quite a few high-dollar deferred compensation cases in arbitration.

If you are a financial advisor who has not been paid your due compensation, please contact Lax & Neville LLP at (212) 696-1999 to discuss your potential matter. At Lax & Neville LLP, we represent securities industry employees nationwide seeking representation in employment matters.