Securities Employment Attorneys
FINRA Attorneys for Financial Advisors and Brokers
Are you a financial advisor involved in securities litigation with your former employer? If so, the securities attorneys of The White Law Group may be able to help you resolve your dispute through FINRA arbitration.
Table of Contents
- Securities Employment Attorneys
- FINRA Attorneys for Financial Advisors and Brokers
- A. FINRA DISPUTE RESOLUTION
- B. CAUSES OF ACTION
- C. DAMAGES
Unfortunately, financial advisors and other industry professionals can face various legal actions that can affect their ability to change jobs or even continue their profession. In such a situation, it is wise to have the support of an attorney with experience handling securities employment claims.
There may be a clause in your employment agreement that states that if you ever had an employment dispute with your broker-dealer employer, you agreed to waive the right to bring such a claim in Court and would instead submit to arbitrating that claim through FINRA’s Dispute Resolution.
A. FINRA Dispute Resolution
In addition to its regulatory function, FINRA offers a dispute resolution forum. This is usually in the context of customer disputes. Still, it is also the forum for most securities employment-related disputes, which are often pursued by employees with the help of attorneys.
Although you have likely waived your right to bring your employment claim to court, there are some benefits to FINRA arbitration.
First, it is generally less costly than bringing the claim in Court. The primary reason for this is that arbitration strongly discourages depositions (which eliminates the need to pay attorneys to depose every relevant witness before the hearing).
Second, arbitration is usually quicker than court litigation. Whereas Court litigation can drag on for years, FINRA arbitrations typically take 12-15 months from the date a securities employee or an employment attorney files the claim.
Finally, there is a limited right to appeal an arbitration award. As such, if you can achieve an award against your former employer for damages, it is unlikely that the brokerage firm can continue to drag out the payment of that award by filing a series of appeals (this is, unfortunately, quite common in Court litigation).
B. Causes of Action
There are numerous causes of action that a broker may bring against their employer in collaboration with a securities employment attorney, including the following:
Wrongful Termination
Essentially, a claim for wrongful termination is an attempt to hold your former employer for terminating you without just cause through FINRA arbitration.
While brokerage firms and financial institutions will go to great lengths to limit their registered representatives from freely moving from employer to employer while retaining their clients, they are quick to remind their brokers that all employment is “at will” and a financial representative can be terminated at any time and for any reason.
Even at-will employees enjoy some statutory protections; however, a securities employment attorney can advise their clients on these protections. Most jurisdictions recognize that termination of employment will be wrongful if undertaken for the following reasons: discrimination, retaliation, refusal to take a lie detector test, and if the reason violates public policy. The scope of what is legally “wrongful,” however, depends on the statute of the state in which the broker is employed.
Promissory Note Claims
Another type of claims securities employment attorneys often take on are those in which brokers receive an upfront payment when they start employment at a broker-dealer. The arrangement may be called a signing bonus, retention incentive, or transitional compensation but is a forgivable loan enforced by the promissory note contract signed by the broker at the commencement of employment with the firm.
Upon receiving a demand to pay the balance due on a promissory note obligation, a broker’s best option is to negotiate the remaining amount owed on the loan and the terms for paying off the debt rather than immediately resorting to FINRA arbitration. A securities employment attorney can review the loan terms and determine the appropriate route.
Retaliation
An example of retaliation is your employer terminating you for reporting a securities practice violation of your supervisor. However, retaliation can also include any termination in retaliation for an action you took that was adverse to your employer. For example, a demotion or transfer instead of termination would still be actionable. When an employer takes this type of adverse action, employees should immediately contact a securities employment attorney to evaluate their case.
Additionally, a retaliation claim can be brought even if the employee is unsuccessful in asserting any other wrongful termination cause of action if the employee can show that the termination or other adverse employment action was the brokerage firm’s response to the employee filing the complaint.
U-5 Defense
One document often featured in FINRA arbitration claims pursued by securities employment attorneys is a broker’s Form U-5. Form U-5 tracks the occasions and reasons they have been let go by a financial firm. As such, it is a key part of the registered representative’s Central Registration Depository (“CRD”) File and a key piece of information any possible future broker-dealer employer will examine when making hiring decisions.
A misleading or otherwise harmful mark on a broker’s U-5 can have serious and detrimental effects on gaining future employment in the industry, so securities employment attorneys often examine them. U-5 marks a broker may seek to remove most often fall into one of two categories: a customer complaint lodged against the broker and/or broker-dealer or a mark by the broker-dealer stating the reason for termination. The decision to remove the mark typically occurs through FINRA arbitration.
A broker whose U-5 shows a customer complaint may be eligible for expungement of the complaint from their U-5 if certain circumstances are met. A securities employment attorney can advise clients on the conditions they must meet before expungement. The broker’s U-5 will note any customer complaint lodged against the broker directly, any claims filed against the broker directly, and even claims filed against the broker-dealer without the broker as a named party but in which the broker is the “subject of” the dispute.
U-5 Defense
One document often featured in FINRA arbitration claims pursued by securities employment attorneys is a broker’s Form U-5. Form U-5 tracks the occasions and reasons they have been let go by a financial firm. As such, it is a key part of the registered representative’s Central Registration Depository (“CRD”) File and a key piece of information any possible future broker-dealer employer will examine when making hiring decisions.
A misleading or otherwise harmful mark on a broker’s U-5 can have serious and detrimental effects on gaining future employment in the industry, so securities employment attorneys often examine them. U-5 marks a broker may seek to remove most often fall into one of two categories: a customer complaint lodged against the broker and/or broker-dealer or a mark by the broker-dealer stating the reason for termination. The decision to remove the mark typically occurs through FINRA arbitration.
A broker whose U-5 shows a customer complaint may be eligible for expungement of the complaint from their U-5 if certain circumstances are met. A securities employment attorney can advise clients on the conditions they must meet before expungement. The broker’s U-5 will note any customer complaint lodged against the broker directly, any claims filed against the broker directly, and even claims filed against the broker-dealer without the broker as a named party but in which the broker is the “subject of” the dispute.
Breach of Contract
As part of your termination, you may have been entitled to various types of compensation (deferred compensation, waiver of promissory note obligations, bonuses yet to be achieved, etc.). A securities employment attorney can review your contract to determine what you were owed. If your employer wrongfully terminated you, you may also have claims for breach of your agreements with that firm that would have entitled you to additional compensation.
Discrimination
All types of discrimination, including age discrimination, gender discrimination, or racial discrimination, are protected by Federal statute. If your termination involved a form of discrimination, you may have a FINRA arbitration claim for violating the Federal statute that protects against that specific type of discrimination. A securities employment attorney can review your claim to assess its likelihood of success.
Defamation
If your employer has defamed you in any way, you would also have a defamation claim. In the brokerage industry context, defamation usually arises when your former employer misrepresents the reasons for your departure from the firm to your clients to induce them to remain with the firm. If you suspect that a former employer has defamed you, it is worth consulting with a securities employment attorney as soon as possible.
Regulatory Inquiry and Wells Notice Response
When FINRA initiates any investigation, they will contact the registered persons affiliated with the action or member firm at the heart of the inquiry. See Wells Notice Process Overview
The preliminary portion of the investigation, which occurs before FINRA arbitration begins, is informal. FINRA or the SEC typically notifies the registered representative of the duty to supply information in any FINRA inquiry under Rule 8210.
The registered person’s response to this notice is critical. If ever contacted as a part of a FINRA investigation, it is essential to schedule a consultation with a securities employment attorney immediately. The registered person’s response determines how the investigation will unfold, whether or not a formal complaint will be filed, and possibly even what sort of sanction could be meted out if the registered representative is found violating applicable rules and regulations.
Any sanction imposed for failure to respond to a FINRA notice is barred from SEC appeal for failure to take advantage of the FINRA process. An experienced securities employment attorney knowledgeable of the FINRA process can help ensure a sufficient response and possibly avoid a formal investigation.
C. Damages
The amount of damages you may be entitled to through FINRA arbitration depends entirely on your circumstances. However, the types of damages potentially available include:
- Loss of income (i.e., the difference between what you would have made had you remained employed versus the income you are now deriving);
- Loss of business (i.e., damages for any clients lost as a result of the wrongful termination);
- Deferred Compensation (i.e., any compensation you would have been entitled to had you not been wrongfully terminated;
- Waiver of Financial Obligations owed to your former employer (including potentially, the nullification of any outstanding promissory notes); and
- Reputational damages (this generally applies to defamation claims and applies to any quantifiable damages resulting from your employer’s defamation of your character).
The foregoing information briefly overviews some types of securities employment litigation involving registered representatives and broker-dealers. If you are a financial advisor involved in securities employment litigation, please call The White Law Group at (888) 637-5510 for a free consultation with an experienced securities attorney.
FAQ
If you believe any information listed on your Form U-5 is incorrect, you should immediately contact a securities attorney. They can advise you on whether expungement is possible or whether there are any additional measures you can pursue through arbitration.
First, it is critical to immediately contact an attorney if you believe your employer committed any of the violations listed above. Once you have done so, you should gather all relevant documentation, including employment contracts, communications between you and your former employer, and any other evidence of misconduct. From there, the attorney can guide you through the arbitration process to maximize your chances of success.
Yes, you can pursue multiple claims in a single arbitration case. If you believe various violations have occurred, inform your attorney of each. They can help you craft a legal strategy based on the strength of each claim.
