CS Credit Suisse Group

By John Letzing 

Credit Suisse Group AG gave up on its wealth-management business in the U.S. last year. But it didn't give up on collecting from Wilhelm Nash.

Mr. Nash is one of a number of former Credit Suisse brokers being pursued for repayment of bonuses, paid in the form of loans when they joined the firm that are forgivable after several years. The practice is common among banks. So are disputes, when employment ends abruptly and a broker fails to repay. Credit Suisse's pursuit of Mr. Nash, for more than $1 million, has been particularly contentious.

After Mr. Nash, 46 years old, filed for bankruptcy protection in Florida late last year, lawyers for Credit Suisse filed suit against him in a West Palm Beach court in April, arguing that he has "fleeced" a few different financial firms by taking unpaid loans as bonuses -- and shouldn't be able to have his debts discharged.

"You just get caught up in it," Mr. Nash said of the pay system, which ties a bonus to a promissory note. "They never once tell you, 'Hey, we'll give you a loan.' It's always your 'signing bonus.'" In three cases, he said, he was unable to repay.

Speaking of Credit Suisse in particular, he said: "These guys have relentlessly chased me to the ends of the earth."

A Credit Suisse spokeswoman declined to comment. Two attorneys representing Credit Suisse in its case against Mr. Nash didn't respond to requests for comment.

U.S. wealth-advisory firms regularly dangle millions of dollars in bonuses, in the form of loans, to lure staff from rivals. The constant, costly rotation provides questionable long-term benefits for brokers, their employers and clients, experts say.

Attorneys say disputes can emerge when an employment relationship ends prematurely -- and a broker feels wronged and declines to repay a loan, simply decides to not repay, or is unable to.

Banks including UBS Group AG are backing off the practice, which may now be curbed as a result of new retirement regulation.

Bill Singer, an attorney who has represented brokerages and brokers, said he sees two or three new cases docketed every week at the Financial Industry Regulatory Authority, or Finra, over the repayment of bonuses tied to promissory notes.

"The people who take these notes are in denial about it, because they are not bonuses," he said.

Rogge Dunn, an attorney in Dallas, is representing more than 20 former Credit Suisse brokers -- not including Mr. Nash -- in disputes with the bank at Finra over issues including loan repayment.

Mr. Dunn said six of his clients took jobs at Credit Suisse's U.S. wealth-management unit last year, not long before the operation was closed: "The next thing you know, Credit Suisse is sending demand letters to these brokers saying, 'Repay your loan.'"

Mr. Nash's path to Credit Suisse began decades ago. He grew up in New Jersey, took finance classes in college and waited tables to pay tuition, he said. A regular customer who worked as a financial adviser offered him a job at Smith Barney in New York after graduation. He wore a suit and suspenders from his girlfriend's closet, left behind by her former boyfriend, on his first day in the office, he said.

When he was 24 years old, he won a signing bonus to join Merrill Lynch. An internal memo from the period viewed by The Wall Street Journal lauded his "cold call success." From there, he moved on to several more employers in the industry.

In 2010, Morgan Stanley filed a claim against Mr. Nash tied to a bonus paid as a loan and won a roughly $2 million award that was not collected, according to public filings.

At roughly the same time Morgan Stanley filed its claim against him, Mr. Nash joined Credit Suisse in New York and took a bonus tied to a roughly $1 million loan payable over seven years, according to Mr. Nash and court records. An internal Credit Suisse publication from that time featured a Q&A with Mr. Nash, saying he had successfully "transitioned many clients" to the bank. He said he was regularly pursued by rivals.

In late 2012, he joined UBS. Shortly after that, Mr. Nash said his hometown in New Jersey was devastated by superstorm Sandy. Roughly two months later, Credit Suisse pursued a successful claim in private arbitration over the loan repayment it was owed by him, but didn't collect. The bank filed suit in federal court in New York in late 2013, seeking an order, later granted, confirming its arbitration award. Mr. Nash moved to Florida and decided to get out of the business.

UBS filed its own claim against him in 2014 over a bonus taken as a loan, and won a $1.7 million award that was not collected, according to public documents.

UBS and Morgan Stanley declined to comment. Both banks are listed as creditors in Mr. Nash's bankruptcy filings. He doesn't dispute that he owes them money, but said, "I got into a financial position where I couldn't pay." Only Credit Suisse, he said, has taken a "scorch the earth" approach to collecting.

Mr. Nash, who is now selling real estate, said he did right by his brokerage clients over the years, though he may not have been "the most prudent with my own assets."

Write to John Letzing at john.letzing@wsj.com

(END) Dow Jones Newswires

December 02, 2016 11:52 ET (16:52 GMT)

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