Morgan Stanley prevails in latest deferred comp dispute

Morgan Stanley has again prevailed in a dispute over deferred compensation that former advisors say they're still owed after leaving for rivals firms.

Seven brokers now at Wells Fargo, Ameriprise and other competitors initially brought a claim for an unspecified amount that they said they earned while at Morgan Stanley but were never paid. Five of the claimants eventually withdrew, leaving only Stephen Overton, now at Ameriprise, and Steven Rosenberg, now at Rockefeller Financial.

A Financial Industry Regulatory Authority arbitration panel dismissed all their claims and assigned Overton and Rosenberg $6,900 in session fees. Morgan Stanley was ordered to pay $7,475 in session fees, and the seven original claimants were together assigned $575 in fees.

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A spokesperson for Morgan Stanley said, "We are gratified that after fully evaluating all the evidence, the panel reached the correct conclusion based on the facts and the law: Morgan Stanley awards deferred compensation to financial advisors during their employment to reward them for retention and good guardianship. That is not a pension plan."

The claimants' lawyer, Alan Rosca of the Beachwood, Ohio-based firm Rosca Scarlato, did not return a request for comment.

Legal mixed messages on deferred comp?

Morgan Stanley has had mixed luck going before FINRA arbitration panels to defend its policies on deferred compensation. It scored a victory in June against eight former brokers seeking $854,636 in deferred comp. But it was ordered by an arbitration panel in April to pay more than $3 million claimed by seven advisors who left, and it was told in June to pay $1.1 million to a pair of ex-advisors.

Morgan Stanley has expressed worries in legal briefings that its battles over deferred compensation are being hampered by a federal judge's interpretation that the payments are protected by the federal Employee Retirement Income Security Act, or ERISA. Morgan Stanley and other firms faced with similar suits have argued such payments are really "bonuses" used to reward employees for sticking around for a set period of time.