What You Must Know
- Former Merrill advisor Kelly Milligan contends an award plan violates ERISA.
- Milligan says he forfeited $500,000 in commissions when he left the agency earlier than the eight-year vesting interval.
- The agency says the cash within the plan just isn’t deferred commissions however a bonus supposed to enourage advisor retention.
Merrill Lynch and dad or mum Financial institution of America have requested a federal choose to dismiss a presumptive class motion lawsuit difficult a rule requiring advisors to forfeit any unvested funds allotted to an awards plan in the event that they depart the agency.
Former Merrill monetary advisor Kelly Milligan contends within the go well with that the eight-year vesting schedule in Merrill’s WealthChoice Contingent Award Plan, and its “cancellation rule” requiring advisors to forfeit unvested cash, violate the U.S. Worker Retirement Earnings Safety Act of 1974.
In a Sept. 30 submitting in U.S. District Court docket for North Carolina’s Western District, nonetheless, Merrill contends that ERISA doesn’t apply to the the WealthChoice plan. Merrill requested the choose to throw out the case with prejudice, which might imply it couldn’t be returned to courtroom.
The award program isn’t a pension plan however somewhat is a “bonus program” that’s “designed to reward lively workers for persevering with to work and enhance efficiency,” Merrill contends in its movement. This system goals to maintain advisors employed at Merrill, and usually they have to be employed to obtain awards, the agency says.
“This lawsuit is not more than an opportunistic try and capitalize on an implausible interpretation of ERISA that may stretch the statute far past what Congress supposed when searching for to guard vested retirement advantages,” Merrill argues.
Merrill disputes Milligan’s argument that the WealthChoice plan funds characterize commissions that advisors earned.
Milligan was a profitable monetary advisor at Merrill “and was well-compensated for it,” the agency contends. When he left, nonetheless, he had not but earned sure contingent incentive awards granted yearly below the plan, it says.
“By the categorical phrases of (Milligan’s) award agreements, he didn’t earn these awards until and till he happy the situations for doing so — most notably, to remain at Merrill for eight years, when the awards vest. Certainly, over his tenure, (he) happy these situations for prior WealthChoice awards, for which he was paid as soon as earned.
