Former Morgan Stanley advisors owed compensation under ERISA, proposed class action filed by Motley Rice alleges

A proposed class action filed by a former Morgan Stanley financial advisor alleges the wealth management group wronged him and other similarly situated FAs by withholding deferred compensation they’re entitled to under the Employee Retirement Security Act of 1974 (ERISA). 

The plaintiff – who is represented by Motley Rice, Ajamie LLP, and Izard Kindall & Raabe LLP – worked for Morgan Stanley for nine years before leaving in 2018, and was a participant by default in the company’s FA Deferred Compensation Program. Morgan Stanley automatically designates a portion of each FA’s commissions as deferred compensation, according to the suit, with 75% of an FA’s deferred compensation going toward the company’s Compensation Incentive Plan and the other 25% toward its Equity Incentive Compensation Plan. Both plans are considered fully vested after six and four years respectively. 

FAs forfeit their deferred compensation if they leave Morgan Stanley before they are fully vested. The plaintiff, however, alleges the company denied him more than $500,000 in deferred compensation despite working for the company for nine years.  

“As alleged in the complaint, Morgan Stanley’s Deferred Compensation Program constitutes an employee pension plan that is subject to ERISA’s vesting and anti-forfeiture requirements,” said Motley Rice attorney for the plaintiff Mathew Jasinski. “We believe Morgan Stanley’s denial of deferred compensation that its former employees earned and are rightfully entitled to violates federal law. Morgan Stanley can, and should in our view, make all affected FAs whole as swiftly as possible.” 

Motley Rice filed the proposed class action, Matthew T. Shafer, on behalf of himself and all other similarly situated, vs. Morgan Stanley, et al., on Dec. 30, 2020, in the U.S. District Court Southern District of New York. 

Read the full complaint.