Wells Fargo came to an agreement with a group of advisors that left the firm and demanded to be compensated for the deferred compensation that they were denied by the firm. And, in legal terms, they won via settlement – to the tune of $79M spread across a host of advisors involved in the lawsuit.
We spoke with several advisors initially involved in the lawsuit as well as others involved in litigation that mirrors ‘deferred comp’ actions. Most of the folks that we spoke to considered the Wells Fargo settlement to be a bad deal for the advisors and a good deal for the lawyers involved. Those lawyers, mind you, are set to get 33% of the total dollar amount (a cool $26M).
Here are a few quotes from advisors involved in the litigation, some who have opted out, and others who are considering the same action:
“This is a bullshit deal, period. It is pennies on the dollar compared to what we are really owed in legit deferred comp claims. Faced with the spectre of .15 to .20 cents on the dollar. I haven’t opted out yet, but I’m close to doing so. I took it this far, my thought it, why not take it significiantly further.”
An advisor who has decided to opt out of the deal had this to say, per media reports:
“It is an issue of legal fairness and the opportunity in California to get legal justice as opposed to a weak and ‘good for the lawyers’ settlement. Opting out is the right move and should produce an outcome significantly better than this one. Wells Fargo chose this deal because its the easy way out and is a paltry percentage of what was actually owed. I’m not willing to give in that easily.”
Another advisor was quick and to the point, “It is simple to me, fuck em. Just fuck em. Both the lawyers and Wells that conspired to get this kind of a deal done. I’m not about to take the money. I’m happy to roll the dice.”
Labor laws in California and North Dakota focusing on non-competitive business practices would entitle advisors in those states to recover 99% of the deferred compensation that Wells withheld. Clearly this reality makes sense for the advisors in those states to opt-out of the deal and take their action further.
We do expect more ‘defectors’ from the settlement and we expect them to become more vocal – not to mention courts continue to rule in favor of the individual versus big banks. The hangover from the financial crisis still looms large in many courtrooms. One way or another, time will tell.