Wells Fargo & Co. agreed to pay $79 million to settle a class action suit involving forfeiture of Wells Fargo Clearing Services LLC financial advisers' deferred compensation.
Robert Berry, a Wells Fargo financial adviser from 1994 to 2014, argued that he and other former financial advisers should be paid the benefits provided by the performance award contribution and deferral plan. Wells Fargo's plan contains a forfeiture clause under which advisers lose the unvested portions of their plan accounts when they leave the company. When the clause was invoked, Berry lost nearly $200,000 in deferred compensation.
The plaintiffs argued that the company's deferral plan is not a "top hat" plan, a deferred compensation plan offered to a select group of management or highly compensated employees, under the Employee Retirement Income Security Act of 1974, thus they should recover the deferred compensation they forfeited. Wells Fargo argued that their plan is a "top hat" plan, and is thus exempted from ERISA's funding, vesting and nonforfeitability requirements.
The settlement, which was signed Jan. 31, awaits preliminary approval from the U.S. District Court for the District of South Carolina, Columbia Division.