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How Morgan Lewis Proved That Capozzi's Purported 'Excessive' Fee Case Was Implausible

"[There are] lessons that can be learned from Morgan Lewis's masterful dismissal motion. These defense tactics apply to many of the illegitimate purported excessive fee lawsuits based on exaggerated and inaccurate data.... The only potentially legitimate excessive recordkeeping claim is if it is based on the rule 408b2 or 404a5 fee disclosures, and compared to the accurate fee disclosures of other companies with similar recordkeeping services. But the vast majority of lawsuits use deceptive Form 5500 inflated data." [Morales v Capital One Fin. Corp., No 21-1454 (E.D. Va. May 27, 2022)]  MORE >>

Morgan Lewis on ESOPs, November 2005 Edition (PDF)

6 pages. This edition covers: Best Plan Practices for Retirement Plans Holding Company Stock; and, Mckesson Revisited Yet Again – District Court Applies a Bright-Line Test to Exempt ESOP Fiduciaries from Liability for Failure to Diversify.  MORE >>

Morgan Lewis on ESOPs –- September 2005 (PDF)

5 pages. Excerpt: The issue contains articles titled: IRS issues proposed regulations denying deduction for redemption of stock held by an ESOP; A growing split among federal courts on the right of participants in individual account plans to recover losses from fiduciary breaches; The Delaware chancery court rejects Disney shareholders' claims; Mckesson revisited; and, New SEC rules may benefit public ESOP companies.

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ISS Releases Four Sets of FAQs, Glass Lewis Provides an Update, and FASB and IASB Make Certain Decisions Relevant to Equity Compensation Plans (PDF)

"ISS [has] issued additional frequently asked questions on 'Selected Topics,' which ... are effective for annual meetings after February 1, 2015.... Glass Lewis [has] announced ... certain 'enhancements' to performance metrics that it uses in its US and Canadian pay-for-performance models and its US equity plan model ... FASB [has] added to its agenda a project to improve and simplify accounting for stock compensation under FASB Accounting Standards Codification (ASC) 718.... [And IASB has] proposed changes to also address the classification of share-based payment transactions where a portion of the shares are withheld for taxes.... Each of these accounting developments is likely to have some impact on equity awards and/or equity compensation plans."  MORE >>

District Court Finds Morgan Stanley's Deferred Compensation Program for Advisors Is Subject to ERISA

"[A] federal judge granted Morgan Stanley's request to force a group of former Morgan Stanley advisors suing the company over deferred compensation to take their claims to private arbitration. However, in that same order, the judge found that Morgan Stanley's deferred compensation programs are governed by ERISA ... Morgan Stanley [has asked] the judge to reconsider his ruling." [Shafer v. Morgan Stanley, No. 20-11047 (S.D.N.Y. Nov. 21, 2023)]  MORE >>

EBSA Agrees Morgan Stanley Deferred Compensation Plan Is Not Subject to ERISA

"There are several arbitrations and even lawsuits over the Plan which Morgan has been defending for years. In those cases, the plaintiff-advisors maintain that the Plan is subject to ERISA and violates its minimum vesting rules. Morgan has been winning many arbitrations. However, in July the United States Court of Appeals for the Second Circuit held the Plan was subject to ERISA and the plaintiff's in the class action could go to arbitration with their claims.... The DOL's Advisory Opinion gives Morgan even more ammunition to defend the arbitrations and may even chill future claims." [Shafer v. Morgan Stanley, No. 24-3141 (2d Cir. Jul. 9, 2025).]  MORE >>

Morgan Stanley Wins Deferred Comp Arbitration Case

"In the FINRA award dated Aug. 8, a three-person panel ruled against former Morgan Stanley rep Patrick T. O'Neill.... In the arbitration, [O'Neill] argued that Morgan Stanley's deferred compensation plan forfeiture for advisors who leave is 'impermissible under ERISA.' " [O'Neill v. Morgan Stanley, No. 24-00358 (FINRA Aug. 8, 2025)]  MORE >>

Court Rejects Morgan Stanley Appeal in Advisor Deferred Compensation Clash

"Morgan Stanley has lost a court battle in its long-running fight to withhold deferred compensation from financial advisors who left the firm -- opening the door for more than 100 advisors to move forward in their FINRA arbitration claims ... [T]he Second Circuit ... dismissed Morgan Stanley's appeal of a 2023 New York U.S. District Court decision that found the advisors' deferred compensation was protected under [ERISA].... The claims range in size from the mid-five-figures to multimillion-dollar cases[.]" [Shafer v. Morgan Stanley, No. 24-3141 (2d Cir. July 9, 2025; unpub.)]  MORE >>

Second Circuit Dismisses Appeal and Rejects Mandamus in Dispute Over Arbitration of ERISA Claims Against Morgan Stanley

"Morgan Stanley argued that the district court's commentary on the merits of the underlying ERISA claims rendered its order effectively a 'denial' of arbitration, and therefore appealable. The Second Circuit rejected this novel theory, citing the statute's plain language and declining to interpret a granted motion as a constructive denial.... Morgan Stanley separately sought a writ of mandamus ... to erase the district court's conclusion that the compensation plans were governed by ERISA. But the Second Circuit made clear that such relief is only available in extreme circumstances." [Shafer v. Morgan Stanley, No. 24-3141 (2d Cir. July 9, 2025; unpub.)]  MORE >>

Judge Reaffirms Morgan Stanley Deferred Comp Plans Fall Under ERISA

"A federal judge reaffirmed his earlier decision that Morgan Stanley's deferred compensation plans fall under federal mandates ... The decision ... is the latest development in a years-long class action suit filed by an array of former Morgan Stanley advisors. The group accused the wirehouse of denying millions in deferred compensation when reps left for other firms." [Shafer v. Morgan Stanley, No. 20-11047 (S.D.N.Y. Nov. 5, 2024)]  MORE >>

Morgan Stanley Says a Judge's Ruling Is 'Wreaking Havoc' on Its Deferred-Compensation Disputes

"Morgan Stanley asked a federal judge to force the advisors to take their claims to arbitration. Last November, Judge Paul Gardephe granted the company's request. But in the same ruling, he found that Morgan Stanley's deferred compensation programs are governed by ERISA. And that is creating costly headaches for the financial-services giant." [Shafer v. Morgan Stanley, No. 20-11047 (S.D.N.Y. Nov. 21, 2023)]

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FINRA Panel Awards Ex-Morgan Stanley Advisors More Than $1M in Deferred Comp

"Ex-Morgan Stanley advisors have again managed to wring deferred compensation out of their former employer before FINRA arbitrators.... [Attorney Alan Rosca said] he's representing roughly 200 ex-Morgan Stanley employees in similar disputes.... All of these cases entail essentially the same arguments ... that Morgan Stanley's deferred comp -- which is often only paid years after it is earned -- falls under [ERISA]."

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Data Breach Victim Files Class-Action Suit Against J.P. Morgan Chase

"[An] employee of a J.P. Morgan client whose retirement account J.P. Morgan administered, claims that his and other victims' sensitive information was targeted, compromised and unlawfully accessed due to the data breach that occurred in August of 2021.... [The plaintiff] also claims that cyber thieves have already engaged in identity theft and fraud and can in the future commit a variety of crimes, including opening new financial accounts and taking out loans in victims' names, filing fraudulent tax returns and giving false information to police during an arrest." [Valentine v. J.P. Morgan Chase & Co., No. 24-3438 (S.D.N.Y. complaint filed May 3, 2024)]

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Morgan Stanley Seeks to Send Brokers' Deferred Comp Lawsuit to Arbitration

"Morgan Stanley has asked a federal court to stay a proposed class action lawsuit related to its deferred compensation plan and compel 12 of its former brokers who filed the suit to arbitrate their claims.... Matthew T. Shafer ... sought class action status for claims based on allegations that Morgan Stanley violates federal laws governing vesting and anti-forfeiture rules for pension and retirement packages by withholding deferred pay when brokers move to the competition. In response, Morgan Stanley has argued that the deferred compensation program is a bonus plan, which is generally not covered by ERISA."  MORE >>

J.P. Morgan Accused of Self-Dealing in Managing Church Trust Fund

"The lawsuit, filed Wednesday in U.S. District Court in Indianapolis, states J.P. Morgan Chase lost money because, as lone trustee for the trusts, the firm purchased more than 177 different investment products, 'mostly from itself, using church funds because they produced the highest revenues to J.P. Morgan, to the detriment of Christ Church.' ... From late 2007 to the end of 2008, the losses brought down the trusts' assets to $27 million from about $39 million.... J.P. Morgan no longer is trustee for the two funds."  MORE >>

ERISA Class Action Filed Against J.P. Morgan Over Defunct American Century Stable Value Fund

"J.P. Morgan Retirement Plan Services, and related entities including J.P. Morgan Chase & Co., have been hit with an ERISA class action by participants who invested in the American Century Stable Asset Fund (ACSAF).... The complaint was filed [in the Southern District of New York] by two plaintiffs who are participants in two different 401(k) plans that offered the ACSAF. The plaintiffs invested in that fund and allege losses recoverable under ERISA because of self-dealing by J.P. Morgan."

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Text of Majority Opinion in Morgan Stanley Case: Plaintiffs Failed to Allege Sufficient Detail as to Breach of Fiduciary Duty Claim Over Investments (PDF)

"Saint Vincent's alleges that Morgan Stanley 'exposed the Plan to excessive risk due to an egregious over-concentration in high-risk mortgage securities,' ... and 'failed to monitor the Plan's investments to protect the Plan from economic harm,' ... None of [the] alleged 'warning signs,' however, gives rise to a plausible inference that Morgan Stanley knew, or should have known, that the securities in the Portfolio were imprudent investments, or that Morgan Stanley breached its fiduciary duty by not selling those investments at whatever unspecified prices existed during the unspecified period in which it was imprudent to maintain those unspecified investments." [PBGC, et al. v. Morgan Stanley Investment Management, Inc., No. 10-4497-cv (2d Cir. April 2, 2013)]  MORE >>

DOL Opinion Fuels Clash Over Whether Morgan Stanley's Adviser Pay Is Really an ERISA Plan

"Because the incentive award amount was tied in part to revenue generated by each adviser, the court labeled it a 'commission,' not a bonus -- a distinction that ultimately pushed the entire arrangement into ERISA territory.... The DOL noted that bonus programs often use complex formulas, include tenure-related rewards and sometimes allow payouts after certain types of termination from the program, such as death or disability. None of those features, in the agency's view, automatically transform an incentive plan into a pension plan designed to provide retirement income." [Shafer v. Morgan Stanley, No. 24-3141 (2d Cir. Jul. 9, 2025); DOL Advisory Opinion 2025-03A]  MORE >>

Lawsuit Seeks to Invalidate DOL Opinion on Morgan Stanley Bonus Plan

"The complaint states that the Opinion used a purpose test and determined that the plan's purposes were to provide bonuses and not retirement income, when case law requires an examination of whether the plan has the effect of deferring income to termination of employment or beyond.... [It] is not unforeseeable that the court that previously held that the Morgan Stanley plan is subject to ERISA will invalidate the Opinion holding it is not." [Sheresky v. Chaves-DeRemer, No. 25-8935 (S.D.N.Y. complaint filed Oct. 28, 2025)]  MORE >>

Former Morgan Stanley Advisers Sue DOL Over ERISA Ruling

"Three former Morgan Stanley financial advisers ... [allege] the agency acted unlawfully when it issued an advisory opinion siding with Morgan Stanley about whether certain deferred compensation plans are protected under [ERISA]. The lawsuit ... claims the DOL's [Advisory Opinion 2025-03A] violated the Administrative Procedure Act and unfairly interfered with ongoing arbitration proceedings." [Sheresky v. Chaves-DeRemer, No. 25-8935 (S.D.N.Y. complaint filed Oct. 28, 2025)]  MORE >>