While financial advisors’ overtime rights can only be resolved at trial, the certification of a class action is a significant step for plaintiffs. Although certification does not prove a plaintiff’s case, it means that a court found a “reasonable issue” raised by the claim. Most class actions are settled after certification. In this article, we look at the case of Merrill Lynch, Wachovia Corp., and First Union Securities Inc.
Two recent class action lawsuits filed by former Merrill Lynch financial adviser trainees allege that the firm failed to pay them for the overtime they worked. The plaintiffs claim the firm required trainees to work more than forty hours per week without overtime pay and then failed to compensate them for the time they worked outside of their regular job duties. The suit alleges that Merrill Lynch encouraged trainees to work more than forty hours per week, but failed to adequately compensate them for the hours they worked.
The case is the second class action filed against Merrill Lynch by former financial advisor trainees, but the first one was dismissed due to similarities to a class action suit that Merrill Lynch filed against a competitor last year. While both suits are related, they address different stages of Merrill’s three-year financial advisor trainee program. The case is still in the early stages, but the stipulations in the lawsuits have the potential to impact all employees.
The 2015 class action lawsuit settled for $14 million. It involved more than nine thousand former trainees who claimed that they were not paid overtime, which violated the federal Fair Labor Standards Act. The lawsuit alleges that Merrill Lynch did not properly pay trainees for overtime hours unless they worked more than forty hours a week and worked more than forty hours during client prospecting events. While a settlement is likely, the case is not yet final. It is important to note that both settlements are subject to court approval.
Wachovia Corporation is a southeastern interstate bank holding company. Its dual headquarters are located in Winston-Salem, North Carolina, and Atlanta, Georgia. Its subsidiaries, such as Wachovia Bank of Georgia and Wachovia Bank of South Carolina, each boast a century-long history. Its member companies operate nearly 500 banking offices in 50 states, offering personal, corporate, and institutional financial services.
In the mid-1990s, Wachovia consolidated three of its principal subsidiaries under one parent company. However, the three subsidiaries continued to operate as independent legal entities, with their boards of directors, staff, and other important characteristics. As a result, Wachovia was able to increase its revenues by 15% that year. In 2001, Wachovia agreed to be acquired by its longtime competitor, First Union. Although this merger brought Wachovia closer to the public, it was still a rocky process.
As the merger process developed, First Union decided to make a bid of $14 billion for Wachovia. It had previously been considering a merger with Wachovia. However, the First Union offer was attractive to Wachovia, since it would allow it to keep its name and retain a majority of the company’s board. Both First Union and Wachovia were able to gain shareholder approval without compromising the company’s identity.
First Union Securities Inc.
Operating under the First Union name, First Union Securities Inc. offers investment banking and brokerage services. Its services include accumulation planning, survivor needs, and portfolio analysis. In addition, the firm offers estate preservation planning. Based in Boca Raton, Florida, First Union Securities is a subsidiary of Wells Fargo Advisors, LLC. First Union Securities also operates under the Origin brand, which connects financial sponsors and strategic acquirers with private companies seeking capital.
In the early 1990s, the company made several acquisitions to expand its product portfolio and improve its brand name. By the end of that year, the bank was the number one bank in New Jersey and Pennsylvania. It also purchased investment bank First Wheat Butcher Singer and consumer finance firm Money Store Inc. in 1998. By then, First Union had grown to nearly $1 billion in assets and was ranked the number one bank in both states.
The transaction was announced during a recent conference call with financial analysts. First Union plans to grow its wealth management business. It expects to increase its net income by 15% a year. It plans to do this through cross-selling, brokerage acquisitions, and other means. Despite these risks, the bank hopes to integrate the Wachovia and First Union operations flawlessly, assuming the merger is completed smoothly. However, there have been some integration issues for brokers.