Solomon Smith Barney Reps Lose CAP Request

Archives Whose Money Is It Anyway? Solly Smith Barney Reps Lose CAP Request 

By Rick Weinberg

Several former Salomon Smith Barney brokers seeking the authorization to start a national class action suit against the firm’s Capital Accumulation Plan (CAP) had their request rejected by a federal judge in Boston, according to attorneys. An appeal has been filed with a higher federal court, attorneys say.

The brokers were advised by lawyers to seek a “federal-level class” so they can charge Smith Barney and parent Citigroup with violations involving CAP, the firm’s deferred compensation plan.

The problem with CAP, according to brokers and their attorneys, is that if brokers leave the firm before the CAP vesting period ended, the firm keeps voluntary contributions to the program. The firm is “illegally seizing” their money, according to an East Coast rep from the firm.

Salomon Smith Barney denies all allegations. The firm is “pleased” with the latest ruling, says spokesperson Susan Thomson. But the firm continues “to believe that [all] charges are without merit,” Thomson says.

In November 2001, a U.S. District Court Judge issued a temporary ruling favoring national class status. But the judge reversed the decision, saying the class may have too many members, forcing the court to “review the laws of every jurisdiction” in which a broker filed suit, according to attorneys. Five separate class-action lawsuits have been certified against SSB’s CAP. States involved include California, New Jersey, Connecticut, Florida and Massachusetts. Attorneys are seeking state class certification in Louisiana and Colorado, and may file claims in Oregon, North Carolina and Texas.

Attorneys disagree over which court has jurisdiction over the case: Delaware, where Citigroup is incorporated or in each of the aforementioned states. Attorney Thomas Towe, of the law firm of Towe, Ball, Enright, Mackey & Sommerfeld, in Billings, Mont., says only Delaware needs to be considered. Smith Barney CAP participants have signed agreement stipulating that Delaware law applies in any disputes regarding the plans, according to Towe.

Towe says the appeals court could decide to not to hear the appeal, order the lower court to create a national class or set up a briefing schedule for lawyers to argue their positions.

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Mark J. Astarita, Esq. is a securities lawyer who represents investors, financial professionals and firms in litigation, arbitration and regulatory matters across the country. He is a partner in the national securities law firm of Sallah Astarita & Cox, LLC and can be reached by email at or by phone at 212-509-6544.

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Securities Attorney at Sallah Astarita & Cox | 212-509-6544 | | Website | + posts

Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.

He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page -, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.