Former Morgan Stanley advisers sue US Labor Department

NEW YORK, – The U.S. Department of Labor has been sued by former Morgan Stanley financial advisors for allegedly issuing an illegal advisory opinion sought by the Wall Street bank that could defeat hundreds of arbitration claims against the bank.

In a complaint filed Tuesday in Manhattan federal court, plaintiffs said the Labor Department’s finding that Morgan Stanley’s deferred incentive compensation plan was not an employee benefit retirement plan under the federal law known as ERISA contradicted two court decisions that said the opposite.

Plaintiffs Steve Sheresky, Jeffrey Samsen and Nicholas Sutro, all of New York’s Westchester County, said the Sept. 9 opinion was arbitrary and capricious and, if implemented, would prevent financial advisors from arbitrating the cancellation of their deferred compensation.

They also said Morgan Stanley was using the opinion as a “sword” in pending arbitrations to show that the claims were frivolous and recoup the costs of appealing their decisions.

Sheresky and Samsen are among 12 former Morgan Stanley advisors who are suing the bank for allegedly failing to pay their full deferred compensation when they left.

Morgan Stanley is not a defendant in Tuesday’s lawsuit. ERISA is the Employee Retirement Income Security Act of 1974.

Neither the Labor Department nor Morgan Stanley immediately responded to requests for comment Wednesday.

“This lawsuit aims to stop the Department of Labor from overusing its illegal agency by getting the court to vacate its advisory opinion,” Doug Needham, an attorney at Motley Fool Rice who represented the plaintiffs, said in a statement. he said. “The Administrative Procedure Act was designed to prevent exactly that.”

The case is Sheresky et al. v. U.S. Department of Labor et al., U.S. District Court, Southern District of New York, No. It is 25-08935.

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