A former Dean Witter rep has filed a prospective class-action suit against the firm claiming that Dean Witter brokers should have been paid out all deferred compensation when the Morgan Stanley deal was finalized.
The suit was filed in June in New Yorks Supreme Court, and argues that under a clause contained in the deferred compensation agreement that all participants sign, reps are entitled to an accelerated payout if the firm goes through a reorganization.
Plaintiff John DAmato, a former broker employed in the Firms Boca Raton, Fla. , office from 1988 to 1997, maintains that the merger of Dean Witter and Morgan Stanley qualifies as a reorganization. DAmato claims that all plan participants--including those still employed at the firm--were entitled to an accelerated payout as of July 1, 1997, the effective date of the merger.
DAmato has filed a separate suit that seeks to invalidate a clause in the firms deferred compensation plan that states that if a broker leaves the firm or is terminated, he or she forfeits the awards theyve been granted over the previous five years.
Zachary Starr of Starr & Holman in New York, an attorney representing DAmato, maintains that the deferred compensation awards constitute wages that have been earned, and whatever is determined to be wages cannot be forfeited under New York labor laws, he says. The word earned is not in the plans documents, but the firm sends its brokers written reports on the amount of their annual awards and uses the word earned in that context, Starr says.
Morgan Stanley Dean Witter has yet to file its initial response in court. The firm does not comment on litigation, according to a spokesperson, and we never comment on compensation matters.
The Morgan Stanley Dean Witter plan represents additional compensation that is awarded to brokers who meet certain levels of production. Brokers are not required to contribute any of their own money.
The lawsuit charges that DAmato is owed deferred compensation for fiscal years 1992 through 1997. DAmato was terminated by the firm in November 1997.
Morgan Bentley, another attorney for DAmato in Newark, N.J., says the firm called DAmatos departure a voluntary resignation on the brokers U-5, but he was actually forced out due to a conflict with his branch manager. DAmato is now employed at Noble International Investments of Boca Raton.
Morgan Stanley Dean Witter would not comment about the reasons for DAmatos departure.