In what may be the first arbitration award of its kind, Salomon Smith Barney was ordered in June to pay 730,000 dollars to a former branch manager, reinstating his Capital Appreciation Plan (CAP) assets.
David Dalton says he was a producing branch manager at SSB and its predecessors for 17 years in Worchester, Mass. He contributed to the CAP from its inception in June 1993 until he was asked to resign and was locked out of his office in June 1994, before reaching the CAP's two-year vesting period. He had more than 13,000 shares of Citigroup stock in the plan at the time of the award.
Neither Dalton nor SSB will elaborate on the reasons for his departure from the firm.
The NASDR arbitration panel ruled that SSB owed Dalton 730,303 dollars for his CAP assets. He got an additional 115,000 dollars for a branch manager and longevity bonus he forfeited.
"As far as I know, this is the first CAP suit to go to arbitration," Dalton says. "I believe people should be entitled to their wages."
SSB has previously settled numerous CAP cases. Dalton says the firm tried to settle with him as well, but he declines to say how much the firm offered.
"I felt very strongly about [litigating] this," Dalton says.
In a prepared statement, SSB says: "We disagree with the arbitrators' conclusion that Mr. Dalton was involuntarily terminated. We are disappointed that they effectively reinstated his unvested CAP awards. Since the award is limited to facts presented in this case, it in no way impacts unvested CAP awards of those SSB employees who have resigned or otherwise left the firm."
Dalton sued the firm in November 1997. He now works as a rep with Tucker Anthony in Worchester.
At least five federal class-action suits are pending against Salomon Smith Barney. The claims allege SSB's Capital Appreciation Plan (CAP) illegally confiscates employees' wages. The firm is attempting to consolidate cases under a "multidistrict litigation" (MDL) umbrella.
At press time, a federal panel in Colorado was scheduled to hear oral arguments July 13 on the procedural merits of the MDL request.
State suits are pending in New Jersey and California. Broker plaintiffs in California were victorious in July 1999 when a Los Angeles Superior Court denied SSB's motion for summary judgment, ruling that the CAP was illegal under California law. SSB is appealing that case.