What You Have to Know
- Kelly Milligan contends he needed to forfeit over $500,000 in deferred commissions.
- Merrill’s mum or dad says its compensation plan complies with all related legal guidelines.
- The plaintiff says the plan violates the Worker Retirement Earnings Safety Act.
A former Merrill Lynch monetary advisor has filed a putative class-action lawsuit in opposition to the funding firm and its mum or dad, Financial institution of America Corp., over a rule requiring advisors to forfeit commissions allotted to an awards plan in the event that they go away earlier than the funds have vested.
Plaintiff Kelly Milligan contends the eight-year vesting schedule in Merrill’s WealthChoice Contingent Award Plan, and its “cancellation rule” requiring advisors to forfeit unvested cash, violate the U.S. Worker Retirement Earnings Safety Act of 1974.
Milligan, a California resident with numerous skilled certifications, forfeited over $500,000 in deferred compensation because of the cancellation rule when he left Merrill Lynch, the place he labored as a monetary advisor from 2000–2021, in keeping with the swimsuit, filed Tuesday in U.S. District Courtroom for North Carolina’s Western District.
The criticism seeks to get well what it defines as deferred compensation that advisors “wrongfully forfeited” after they left Merrill, and asks the court docket to rule the plan is topic to ERISA and that the cancellation rule violates ERISA’s vesting and anti-forfeiture necessities.
“We’re assured the WealthChoice Plan just isn’t lined underneath ERISA and that our compensation program complies with all related legal guidelines,” Financial institution of America spokesman Invoice Halldin instructed ThinkAdvisor by e-mail Thursday.
Monetary advisors at Merrill obtain wage and commissions, with a portion of commissions mechanically allotted to the WealthChoice plan, in keeping with the swimsuit. Commissions allotted to the plan vest in eight years, the swimsuit says.
The plan qualifies as an “worker profit pension plan” underneath ERISA as a result of it “ends in a deferral of earnings by workers for intervals extending to the termination of lined employment or past,” Milligan argues, including that monetary advisors are paid for income they generate years after they carry out the work.
Advisors obtain the worth of their plan accounts after their employment ends in the event that they retire, are laid off or turn out to be disabled, the lawsuit says.