Monday, May 23, 2022

CRIMINAL CAPITALI$M
Wells Fargo Ordered to Pay Advisor Nearly $1 Million for Its Role in Credit Suisse Deferred-Comp Spat

By Andrew Welsch
May 23, 2022 

Seven years ago, Credit Suisse struck an unusual arrangement with Wells Fargo , giving Wells the inside track on recruiting the Swiss bank’s nearly 300 U.S.-based financial advisors.

Credit Suisse was closing its U.S. wealth management operation, and these elite advisors, who managed $93 billion in collective assets at the time, needed a place to go. Wells Fargo executives made their pitch to the advisors during a virtual town hall meeting in October 2015.


“We want you,” Mary Mack, then head of Wells Fargo Advisors, said according to a transcript of the meeting. She said Wells Fargo was “prepared to offer everybody” recruiting bonuses up to 300% of their annual revenue as an incentive to make the move. Advisors could expect offers in about two weeks.


Signage at a Wells Fargo bankDavid Paul Morris/Bloomberg


Not every advisor got one, it seems.

Anthony Aris Dertouzos alleged that he was snubbed by Wells Fargo. In addition, Credit Suisse withheld millions of dollars of deferred compensation from advisors as part of its planned exit from its U.S. wealth management business, he also alleged.

On May 17, a Finra arbitration panel ordered Wells Fargo to pay Dertouzos nearly $1 million for “negligent misrepresentations, fraud, [and] aiding and abetting Credit Suisse’s scheme to steal the deferred compensation from its relationship managers,” according to the arbitration award.

“I think everyone assumed that, based on the public statements, Wells Fargo would make an offer to everyone,” says Kevin T. Hoffman, an attorney for Dertouzos. “But they retained discretion to hire who they wanted.”

Dertouzos, who now works for Morgan Stanley , is ranked among Barron’s Top 1,200 Advisors for 2022. He declined to comment on the arbitration award.

His arbitration case against Wells Fargo was a lengthy one. Dertouzos filed his claim in 2018; the panel issued its ruling after 59 hearing sessions.

It appears to be the first to allege a Wells Fargo role in helping Credit Suisse to withhold deferred compensation.


Credit Suisse was not named as a party in the Dertouzos/Wells Fargo arbitration. It reached a confidential settlement with Dertouzos in a separate case. Hoffman declined to comment on that case.

A spokesman for Credit Suisse declined to comment on the case.

Wells Fargo denied the allegations, according to the arbitration award. A spokeswoman for the bank could not be reached for immediate comment.

Former Credit Suisse advisors have filed dozens of arbitration claims against the Swiss bank for allegedly withholding millions in deferred compensation. The company has denied the allegations.

It has had a mixed record in Finra arbitration.

In January, a Los Angeles-based arbitration panel ordered Credit Suisse to pay $6.3 million to seven financial advisors who say the firm wrongly withheld their deferred compensation. The following month, a Houston-based panel sided with Credit Suisse in a similar dispute with three of its former advisors.

During the 2015 town hall, former Credit Suisse executive Phil Vasan told advisors that if they moved to Wells Fargo they would receive a “very compelling onboarding award.” If advisors did not “to Wells Fargo, that’s not available to you,” Vasan said according to the transcript, which was filed in a New York state court as part of litigation between two ex-Credit Suisse advisors and the Swiss bank.

Though Credit Suisse has lost some arbitrations to advisors, it won a raiding case against UBS, which poached roughly 100 of Credit Suisse’s advisors following the announcement of the recruiting arrangement with Wells Fargo.

Write to Andrew Welsch at andrew.welsch@barrons.com

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