Bank of America agreed to pay $12.8 million to settle claims made by more than 270 former employees that the bank failed to follow proper procedures after terminating them. The ex-employees held that the procedures would have allowed them to argue they deserved to leave the firm with some of their deferred compensation that was not yet paid out.
Many Wall Street brokerages offer bonuses and other compensation in the form of deferred cash, seeing it as a way to delay immediate payouts and to lock in employees who might be tempted to jump to rival firms.
A Bank of America spokesman declined to comment. As part of the settlement, the bank and Merrill Lynch did not admit or concede to any of the allegations made by the former advisers.
The settlement amounts will total nearly $47,000 for each former employee. The lawyer who represented the former employees, Michael Taaffe, called it a significant win for brokers' protection in an era when mergers are common.
"If they were terminated for cause, the bank had to allow them opportunity to present their side of the story to make sure that the termination was appropriate and not because the bank wanted to keep their deferred compensation," said Taaffe, a partner at Shumaker, Loop & Kendrick in Florida.
(Reporting by Elizabeth Dilts; Editing by Matthew Lewis)