January 5, 2012 Comments (0) Blog, Securities Fraud

Basics of Securities Employment and Wrongful Termination Arbitration Claims

(Last Updated On: July 17, 2015)

Are you a financial advisor with potential employment claims against your former employer?  If so, the securities attorneys of The White Law Group may be able to help.

When it comes to attrition and general employment issues, the brokerage industry is just like any other.  Unfortunately, financial advisors and other industry professionals are being improperly terminated all of the time.  Fortunately, there is a way to attempt to recover damages from this improper termination from your former employer – FINRA arbitration.

Whether or not you realized it or not at the time of your hiring, there was likely a clause in your employment agreement that stated that if you ever had an employment dispute with your broker-dealer employer you agreed to waive the right to bring such claim in Court and would instead submit to arbitrating that claim through FINRA’s Dispute Resolution.

A.      FINRA DISPUTE RESOLUTION

In addition to FINRA’s regulatory function, the agency also offers a forum for dispute resolution.  This is usually in the context of customer disputes, but it also the forum for most all securities employment related disputes.

Although you have likely waived your right to bring your employment claim in Court, there are actually some benefits to FINRA arbitration.

First, it is generally less costly then bringing the claim in Court.  The primary reason for this is that FINRA arbitration strongly discourages the use of depositions (which eliminates the need to pay attorneys to depose every relevant witness in advance of the hearing).

Second, FINRA arbitration is usually quicker consuming than Court litigation.  Whereas Court litigation can drag on for years, FINRA arbitrations usually take 12-15 months from the date the claim is filed.

Finally, there is a limited right to appeal an arbitration award.  As such, if you are able to 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

Financial advisors are improperly terminated for a variety of reasons and this leads to an array of different causes of action that a broker may bring against his/her employer.  The following is but a sample:

–  Wrongful Termination – this claim is exactly as it sounds.  Essentially, a claim for wrongful termination is an attempt to hold your former employer for terminating you without just cause.

–  Retaliation – An example of retaliation would be your employer terminating you for reporting a securities practice violation of your supervisor.  However, retaliation can include any termination in retaliation for some action taken by you that was adverse to your employer (this is also often viewed in the whistleblower context).

–  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, yet to be achieved bonuses, etc.).  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.

–  Breach of the Implied Covenant of Good Faith – Implied in every contract is an obligation of the parties to act in good faith.  If your employer wrongfully terminated you, you may also have a claim for breach of this implied covenant.

–  Tortious Interference with Business Relationships – If you were wrongfully terminated, your employer has likely also improperly cut you off from your clients and your ability to service these clients.  As such, the firm may also be liable for the tortuous interference with your business relationships.

–  Discrimination – Many times the wrongful termination of an employee involves some kind of discrimination (whether it be age discrimination, gender discrimination, or racial discrimination).  All types of discrimination are protected by Federal statute, and if your termination involved a form of discrimination, you may have a claim for violation of the Federal statute that protects against that specific type of discrimination.

–  Defamation – If your employer has defamed you in any way, you would also have a claim for defamation.  In the brokerage industry context, defamation usually arises when your former employer misrepresents the reasons for your departure from the firm to your clients in order to induce them to remain with the firm.

C.            DAMAGES

The amount of damages you may be entitled to is completely dependent on your specific 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 is just a brief synopsis of the securities employment arbitration process.  If you are a financial professional and need to speak with a securities employment attorney, please contact The White Law Group’s Chicago office at 312-238-9650.

The White Law Group, LLC is a national securities fraud, securities arbitration, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.

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