Ex-Merrill Brokers Reach Settlement Over Deferred Pay
08/22/2012| 06:52pm US/Eastern
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By Christian Berthelsen and Caitlin Nish
Merrill Lynch has reached a legal settlement in a putative class action lawsuit over deferred pay with potentially thousands of disaffected brokers who left the firm in the wake of its acquisition by Bank of America (BAC).
Lawyers for the brokers and Merrill are scheduled to appear in New York federal court Friday afternoon. The parties reached an "agreement in principle" on Aug. 10 to settle the case, Merrill said in its quarterly financial filing earlier this month. The agreement is subject to approval by the court.
In a prepared statement, Merrill spokesman William Halldin said the firm "agreed to a resolution to avoid the cost and distraction of what would likely be continued, lengthy litigation." He declined further comment on the details because terms of the settlement had not yet been presented to the court. News of the settlement was first reported by Reuters.
The case stems from a dispute between Merrill and as many as 3,000 former brokers, who say the firm's September 2008 sale to Bank of America constituted a "change in control" that nullified strictures governing their deferred compensation.
Often, much of the money piling up in brokers' deferred-compensation accounts vests only if they remain with the firm for some time. But lawyers for the brokers have argued that the terms for several Merrill Lynch deferred-compensation programs gave brokers the right to the money if they leave the firm with "good reason."
In an April ruling, a Financial Industry Regulatory Authority arbitration panel sided with two of the brokers and awarded them $10 million in back pay, finding Merrill and its senior management "intentionally, willfully and deliberately engaged in a systematic and systemic fraudulent scheme to deprive claimants of their rights and benefits" under its deferred compensation plan after the firm's sale.
-Write to Christian Berthelsen at christian.berthelsen@dowjones.com
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