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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)]

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.)]

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)]

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.)]

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]

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).]

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)]

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)]

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)]

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)]