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Most challenges to the plan have been turned back, but a new case could present more problems.
In recent years, Prudential securities has fended off numerous challenges to the legality of its deferred compensation plan, known as MasterShare, but it might have more than the usual amount of trouble shaking Yaakov Holansky's case.
The trouble for Pru began when Prudential Financial filed a motion to dismiss a case brought by Holansky, a former broker at the firm. (Pru Financial has spun off its brokerage unit to Wachovia but is still liable in the Holansky case.) Not only did Holansky survive that motion, but a judge in Federal Northern District Court of Illinois ruled that MasterShare might qualify as an employee benefit pension plan, and therefore be governed under the U.S. Department of Labor Employee Retirement Income security Act (ERISA).
"What disturbs Prudential is that the judge allowed the possibility that [MasterShare] might be an ERISA retirement plan," says a source familiar with the case. "That's not what it is or what it was ever presented as being. It's a three-year golden handcuff."
Holansky now embarks on an effort to prove that his case should fall under ERISA, which strictly prohibits forfeiture of employee contributions. (MasterShare is a deferred comp plan in which...