AdvisorHub – Ex-Merrill Sales Boss Prevails in Arbitration, Wins Withheld Shares
Bowman was a complex manager in Philadelphia when he resigned in 2014 to join Snowden Capital Advisors, an independent advisory firm in New York founded two years earlier by several of his former colleagues. Merrill owed him deferred compensation of 50,152 restricted stock units in Bank of America, which purchased the brokerage firm in 2009, Bowman said in his arbitration complaint.
Although the shares were not vested at the time of his departure, Bowman’s complaint included allegations of unjust enrichment and breach of contract by Merrill.
In a decision posted Wednesday, a three-person Financial Industry Regulatory Authority panel ruled that Bowman was entitled to the almost 22,000 restricted shares he was awarded in 2012 and 2013, but not to 19,832 stock units that Merrill granted in February 2014.
Based on Bank of America’s stock price on Friday afternoon, Bowman’s share award would be worth about $303,240.
As is customary, the Finra arbitrators did not explain the reason for their decision.
A Merrill Lynch spokesman did not respond to a request as to whether it will appeal the arbitrators’ decision.
Plaintiffs’ lawyers who represent brokers said the decision is notable, if for no other reason than firms are increasingly compensating advisors and executives with deferred equity awards that they are loathe to release.
“It is not common for Finra arbitrators to award restricted stock, so it’s a big victory,” said Jeffrey Riffer, a partner with Elkins Kalt Weintraub Reuben Gartside in Los Angeles. “It will probably encourage other advisors to file claims on their restricted stock.”
Riffler is one of several lawyers representing former Credit Suisse brokers in the U.S. seeking deferred compensation that the Swiss bank has denied them.
Merrill and other firms today require brokers to sign employment contracts that prohibit them from taking unvested deferred compensation if they join a firm with any similar lines of business, said a lawyer who spoke on condition of anonymity.
“We fought Merrill Lynch every step of the way, and we are pleased with the arbitrator’s decision,” said Thomas B. Lewis, a lawyer at Stevens & Lee in Princeton, New Jersey, who represented Bowman.
For Snowden Capital, the award could help recruiting efforts. The firm, which is dually registered as a broker-dealer and registered investment advisor, employs 38 brokers, according to its most recent SEC filing, most of whom are Merrill alumni.
“Merrill put extraordinary effort and expense into this case, but we feel the result speaks for itself,” said Snowden Chief Executive Robert Mooney, who was former general counsel of Merrill Lynch Global Wealth Management and who testified in the arbitration.
Bowman, who joined Merrill in 1983 and left as a complex director in Philadelphia, is a partner and managing director at Snowden, focusing on business development.