DOL Sides with Morgan Stanley in Deferred Compensation Dispute

Core Viewpoint - The U.S. Department of Labor (DOL) has determined that Morgan Stanley's deferred compensation program qualifies as a bonus program, exempting it from being classified as an employee pension benefit plan under the Employee Retirement Income Security Act (ERISA) [2][6]. Group 1: DOL Ruling and Implications - The DOL's ruling supports Morgan Stanley's position in ongoing arbitration cases, marking five consecutive wins against financial advisors who left before their deferred compensation vested [3]. - The DOL's opinion indicates that the deferred compensation program consists of 25% as an unsecured deferred stock award and 75% as an unsecured cash-based award, with conditions for payout on the scheduled vesting date [7]. - This ruling limits the potential for financial advisors to challenge the program in a class action lawsuit, as a federal judge had previously indicated that the compensation plans were covered under ERISA, but the DOL's recent opinion solidifies the bonus classification [4]. Group 2: Legal Context and Previous Decisions - A federal appeals court upheld the view that Morgan Stanley's deferred compensation plans are protected by federal law, dismissing the firm's appeal regarding jurisdiction [5]. - The DOL's recent opinion, issued by Jeffrey J. Turner, confirms that the deferred compensation program meets the exemption criteria under ERISA as a bonus program, reinforcing the legal standing of Morgan Stanley's compensation structure [6].