Client Alert 
January 5, 2021

Former Morgan Stanley Advisor Filed
Putative Class Action Over Forfeited Deferred
Compensation Following Departure
In a recently filed federal court action, Matthew T. Shafer, a former Morgan Stanley financial advisor claims that over $500,000 of his deferred compensation of was improperly forfeited by Morgan Stanley following his departure.  Mr. Shafer filed the complaint in the U.S. District Court for the Southern District of New York claiming violations of the Employee Retirement Income Security Act of 1974 (“ERISA”) § 203(a), 29 U.S.C. § 1053(a). The putative class action lawsuit seeks class certification and recovery on behalf of what is believed to be thousands of former Morgan Stanley advisors whose deferred compensation was forfeited upon their respective departures since December 30, 2014.

According to the complaint, “Morgan Stanley automatically designat[ed] a portion of the very first dollar [financial advisors] earn as ‘deferred compensation.’” The complaint further alleges that Morgan Stanley’s deferred compensation plans cause financial advisors to forfeit deferred compensation if they leave Morgan Stanley prior to vesting dates, with certain exceptions, and that such forfeiture violates ERISA. 

EGS is currently reviewing the action and consulting with its many former Morgan Stanley financial advisor clients that were subject to deferred compensation forfeiture upon their departure since December 30, 2014 regarding potential recourse.

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Should you have any questions or would like any additional information, please contact our Litigation Department Chairperson David A. Gehn by telephone at (973) 202-6062 or via email: dgehn@egsllp.com.

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This alert is published solely for the informational interest of friends and clients of Ellenoff Grossman & Schole LLP and should in no way be relied upon or construed as legal advice.