A federal judge has denied Ameriprise's attempt to dismiss a lawsuit alleging that the firm withheld reimbursement payments and wages from an advisor, allowing a class-action case that could shine an unwelcome spotlight on Wall Street's compensation and employment practices to proceed.
Michael Saunders, who was based in Woodland Hills, California, alleges that Ameriprise extended him a forgivable loan in the form of a transition bonus intended to support his practice. Saunders claims that he used those funds for necessary business purposes such as paying his employees, as stipulated in the agreement, but then Ameriprise failed to reimburse the money.
Saunders also alleges that Ameriprise failed to pay him and other advisors wages and overtime, a claim that could bring scrutiny of the longstanding Wall Street practice of employing registered representatives as independent contractors.
His lawsuit alleges four violations of California labor and business laws, and seeks to represent a broad class of advisors who have worked for Ameriprise since November 2014.
The firm argued in a motion to dismiss the case that Saunders' complaint was overly vague and that he failed to demonstrate specific types of bonuses he received or the terms of the arrangements.
Judge Michael Fitzgerald of the U.S. District Court in California's Central District was not persuaded, denying the motion in its entirety and paving the way for the suit to continue.
"Contrary to Ameriprise's contention, plaintiff has specifically alleged that he received a bonus and that '[s]uch money is and was used by [him] ... for necessary expenditures incurred in the discharge of [his] duties but such monies were not reimbursed by [Ameriprise],'" Fitzgerald writes in an order.
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Jason Kirkland, a former Baird employee, has sued the firm for allegedly withholding his compensation.
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The deal could grow Baird’s headcount by about 44%.
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The broker-dealer alleges Jason Kirkland violated company policy, used confidential information and broke his 12-month non-solicitation agreement, among other claims.
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Ameriprise has until April 1 to respond to the complaint.
"We believe this case is without merit and we will defend ourselves vigorously," Kathleen McClung, a spokeswoman for Ameriprise, writes in an email.
Attorneys for Saunders did not respond to multiple requests for comment.
Saunders, an advisor of 30 years, has not been registered with Ameriprise since January 2018, according to FINRA BrokerCheck records. He is not currently registered with any firm, according to BrokerCheck.
The case, which began in a California superior court before moving to the federal district, could have ripple effects far beyond that state, according to Bill Singer, a veteran securities attorney and author of the
"This is an interesting case, because what I see it doing is it's really going to the core of Wall Street's compensation system, and it's asking some very disquieting and uncomfortable questions," Singer says.
Should the judge certify the class, it could draw in current and former Ameriprise advisors from around the country, given that many — perhaps most — would be registered in California, among other states.
"Virtually every large or midsized broker-dealer has a branch office in California," Singer says. "This does have the potential to be very disruptive. It would be unlikely that this could be hermetically contained in California."
He sees California, a "vanguard of progressive labor law," as an ideal venue for a case like the one Saunders has brought.
"This may be about the most hospitable time for somebody to bring this case in California, given the fact that people still recall the Great Recession, that there is still a sense in California that labor and employees are being disadvantaged under the Trump administration, that Wall Street is not being properly regulated, and that its compensation system is largely to blame," Singer says.
