Posts tagged ‘FINRA employment attorney’
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.
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.
Are you a financial advisor with an erroneous U-5 entry? Do you need an experienced securities employment attorney to help you clean up your employment record? If so, The White Law Group may be able to help.
Under Article V, Section 3 of FINRA’s By-Laws, within 30 days after termination of a registered employee’s employment, a member firm must complete and submit a Form U-5 to FINRA and give a copy to the employee. As FINRA has stepped up its regulatory functions in recent years, broker-dealers are now feeling the heat to report everything to assure compliance with both U-4 and U-5 disclosure requirements. This has resulted in brokerage firms disclosing the most innocuous details regarding an employee’s departure from the firm. These details can have a significant impact on a financial advisor’s ability to find employment with another broker-dealer. Even a simple “Yes” indicating a pending investigation at the time of termination can negatively affect a broker’s ability to get a job with a new firm. cAdditionally, if these statements are not completely accurate, they may lead to legally viable claims for defamation, wrongful termination, retaliation, or discrimination. They may also lead to claims to have the improper information “expunged” from the advisor’s U-5 (generally, an arbitration panel can award expungement relief to a financial advisor if the information the member firm provided on an Associated Person’s Form U5 is defamatory, misleading, inaccurate, or erroneous).
The White Law Group represents brokerage firm employees whose former employers improperly placed derogatory or inaccurate statements on their U-5 termination forms. To speak with a securities employment attorney regarding your legal rights, please call the firm’s Chicago office at 312-238-9650.
The White Law Group, LLC is a national 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, please visit our website at http://www.whitesecuritieslaw.com.
Are you a financial advisor with an employment dispute with your former employer? If so, The White Law Group may be able to help.
The White Law Group has experience with all types of securities employment disputes. Typical types of securities employment disputes include, but are not limited to:
1. Wrongful termination – Although most financial advisor’s are at-will employees that can be terminated for any or no reason, if the stated reason for the termination given by the brokerage firm is inaccurate, this may raise a claim for wrongful termination.
2. Promissory note litigation – Most brokerage firms use Promissory Notes as a recruiting tool. However, if an advisor leaves before the terms of the Note are fulfilled, brokerage firms often sue the advisor for collection of the outstanding balance owed on the Note.
3. Defamation – Defamation is any intentional false communication, either written or spoken, that harms a person’s reputation. In the securities arbitration context, such defamation includes an inaccurate mark on an advisor’s U-4/U-5.
4. Retaliation /whistleblower claims – If a broker-dealer terminates an employee for reporting a compliance violation or some other unlawful or unethical activity (or stopping this employee from doing so), this can be grounds for a retaliation or whistleblower claim against the firm.
5. Solicitation / raiding claims – Such claims generally involve the recruitment of brokers from one firm to another and usually includes the firm losing the advisors to sue the acquiring firm. Often times the advisors are caught in the middle and they may even need separate representation (apart from the attorneys hired by their new firm) to ensure that their interests are protected.
6. Tortuous interference with a business relationship – If a former employer is interfering with your ability to make a living or to work with a particular client, you may have a claim for tortuous interference with a business relationship.
7. Discrimination – Discrimination can include age discrimination, gender discrimination, and racial discrimination. Discrimination based on age, gender, or race is prohibited by Federal Statute and is certainly actionable. Such claims often include a separate charge made with the Equal Employment Opportunity Commission (EEOC) prior to bringing a FINRA arbitration claim.
Securities employment disputes are governed by the FINRA Code or Arbitration for Industry Disputes.
FINRA Rule 13200 states that except as otherwise provided in the Code, a dispute must be arbitrated under the Code if the dispute arises out of the business activities of a member or an associated person and is between or among: Members (i.e. broker-dealers); Members and Associated Persons (i.e. financial advisors); or Associated Persons.
As such, if you are a financial advisor with an employment dispute involving your former employer, it is likely that the case will need to be arbitrated through FINRA’s Dispute Resolution.
One exception is if the matter involves discrimination claims, including sexual harassment. FINRA Rule 13201 states that a claim alleging employment discrimination, including sexual harassment, in violation of a statute, is not required to be arbitrated under the Code. Such a claim may be arbitrated only if the parties have agreed to arbitrate it, either before or after the dispute arose.
FINRA arbitrations usually take between 12-15 months from the date of filing and depositions are strongly discouraged, making the process generally faster and less expensive than litigation filed in Court.
Since securities employment disputes are usually handled through FINRA arbitration, it is important to hire an experienced FINRA securities employment attorney who is familiar with the nuances of FINRA arbitration (versus Court litigation).
The White Law Group is a national securities arbitration, securities regulation, and securities compliance law firm. The firm has offices in Chicago, Illinois and Boca Raton, Florida. The firm’s lawyers have extensive experience in securities employment disputes, including previous experience representing some of the world’s largest broker-dealers.
If you believe you have a question about a securities employment matter, please contact a securities employment lawyer with The White Law Group by contacting the firm’s Chicago office at 312-238-9650.
For more information on The White Law Group, please visit the firm’s website at http://www.whitesecuritieslaw.com.
Can an employee waive his/her right to access to a court for a statutory discrimination claim and be required to arbitrate such a claim?
The answer is maybe. The U.S. Supreme Court in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24, 111 S.Ct. 1647, 1651 (1991) enforced an arbitration agreement with respect to an employee’s Age Discrimination in Employment Act (“ADEA”) claim. The Court found that arbitration of an ADEA claim did not contravene the purposes of the ADEA.
Additionally, the Court found that the procedures governing arbitration were not so inadequate as to make the arbitration agreement unenforceable. The Court also found that unequal bargaining power between an employer and an employee, in general, did not make arbitration agreements unenforceable.
The Courts, however, have since been split on this issue. For example, the Fifth, Sixth, Seventh and Tenth Circuits have generally upheld the arbitrability of statutory claims based only on a general arbitration agreement covering “any and all claims.”
The First, Second, Fourth, and Ninth Circuits, on the other hand, have generally refused to require an employee to arbitrate statutory claims based only on a general arbitration clause requiring arbitration “of any and all claims.” The Courts in these circuits have added an additional requirement that such waivers be knowing and voluntary. See Nelson v. Cypress Bagdad Copper Corporation. 119 F.3d 756 (9th Cir. 1997) (The Court found that the employee did not knowingly agree to arbitrate his ADA claim by signing a form acknowledging receipt of the revised employee handbook, where nothing in the form notified the employee either that the handbook contained an arbitration clause or that the acceptance of the handbook was a waiver of a judicial forum for a possible ADA claim).
The Court in Brisentine v. Stone & Webster Engineering Corp. has further established a three-part test for determining whether statutory claims are covered by an arbitration agreement: (a) Did the employee give his individual consent? (consent by a union in a collective bargaining agreement is not enough); (b) Does the agreement authorize the arbitrator to resolve statutory claims? (c) Does the employee have the right to insist upon arbitration if the grievance is not resolved to his satisfaction in the preliminary steps of the grievance procedure? See Brisentine v. Stone & Webster Engineering Corp., 117 F.3d 519 (11th Cir. 1997).
What about arbitrating discrimination claims through the FINRA/NASD arbitration process?
FINRA (formerly the National Association of Securities Dealers), recognizing the split on this issue in the courts, has adopted regulations regarding the arbitration of statutory employment discrimination claims. Effective January 1, 1999, FINRA excluded statutory claims from the mandatory arbitration agreements covering all employment disputes between its members and their FINRA registered employees.
FINRA has also provided that if an employer wishes to continue to arbitrate statutory employment discrimination claims they may still require all employees to sign an arbitration agreement concerning those specific claims (thereby effectively bypassing the FINRA’s new rules on the exclusion of statutory discrimination claims from mandatory arbitration).
Accordingly, the primary effect of the rule change was to render the U-4’s basic disclosure language and arbitration clause (“any and all claims”) insufficient to compel arbitration of a statutory discrimination claim. However, pursuant to FINRA rules, if the employee executes a pre-dispute arbitration clause that specifically mentions the employees waiver of bringing a statutory discrimination claim in Court (such that a reasonable employee would realize that he/she is waiving his/her right to the claim), then the statutory claim is not excluded from arbitration through FINRA.
VARIOUS COURT HOLDINGS ON THIS ISSUE
Cole v. Burns Int’l Security Services, 105 F.3d 1465 (D.C. Cir. 1997). An arbitration agreement which subjected at the employer’s option all claims including the employee’s statutory employment discrimination claims was valid under Gilmer because the agreement incorporated AAA rules, provided for neutral arbitrators, allowed for “more than minimal” discovery, required a written award, provided for all relief that would be available in court, did not require employee to pay any part of the arbitrator’s fee, and did not require employee to pay unreasonable costs.
Rosenberg v. Merill-Lynch, No. 96-12267-NG (D. Mass., Jan. 26, 1998). Form U-4, the same one involved in Gilmer, does not require arbitration of Title VII sexual harassment and ADEA claims. The court holds that the 1991 amendments make it clear that Gilmer should not be applied to Title VII claims, as opposed to ADEA claims. The court also held that Rosenberg presented evidence proving that the NYSE system was institutionally biased in favor of employers. The court therefore refused to apply Gilmer.
Desiderio v NASD, 191 F3d 198 (1999). Expressly rejecting Duffield, found no evidence that Congress in Title VII intended to preclude waiver of judicial forum. U-4 found not to be unconscionable. Constitutional claims rejected for lack of state action.
US v John Nuveen & Co., 146 F3d 175 (1999). Enforced a U-4 arbitration agreement, rejecting arguments alleging unconscionable adhesion or yellow dog contract.
Hooters of America Inc. v Phillips, Case, 173 F3d 933 (1999) Found mandatory pre-dispute agreements generally enforceable, expressly rejecting Ninth Circuit’’s Duffield analysis, but found that no binding agreement existed in this case because one-sidedness of employer’s system breached contract to arbitrate.
Carson v. Giant Foods, Inc., 175 F.3d 325 (1999). Found that CBA language did not present clear and unmistakable waiver of employee’s right to a judicial forum as required by Wright. Therefore, arbitration of statutory claim was not required. Court outlined ways in which Wright standard for effective waiver could be met.
Williams v Cigna Financial Advisors, Inc., 56 F3d 656 (1995). Enforced securities industry pre-dispute agreement. Rejected OWBPA argument regarding waiver. On appeal after remand, the court applied (and defined) the standard of manifest disregard of the law and declined to adopt a deferral concept in affirming the district court’s decision upholding the arbitration award which rejected the employee’s discrimination and retaliation claims.
EEOC v Frank’’s Nursery & Crafts, 177 F3d 448 (1999). Found that while employee may waive right to sue by agreeing to arbitration, that action cannot preclude the EEOC from pursuing both monetary and injunctive relief on employee’s behalf.
Willis v Dean Witter Reynolds, Inc., 948 F2d 305 (1991). Enforced securities industry’s U-4 arbitration agreement
Koveleski v SBC Capital Markets, 167 F3d 361 (1999). Enforced pre-dispute agreement, relying heavily on Seus and Rosenberg, rejecting Duffield.
Michalski v Circuit City Stores, 177 F.3d 634 (1999). Building on Koveleski, enforced pre-dispute agreement imposed after employment. Adequate consideration found in employer’s commitment to be bound by arbitration award.
Gibson v Neighborhood Health Clinics, Inc., 121 F3d 1126 (1997) Found arbitration provision unenforceable for lack of consideration where employee signed contract referring to arbitration agreement in manual, but manual was not given to her at time of signing; manual specifically stated that it created no contractual obligation on the part of the employer.
Patterson v Tenet Healthcare, Inc., 113 F3d 832 (1997) Held that separate handbook provision established binding agreement to arbitrate.
Duffield v Robertson Stephens & Co., 144 F3d 1182 (1999). Found pre-dispute securities agreement to arbitrate not enforceable as to Title VII. Held that Congress, through CRA of 1991, intended to preclude compulsory arbitration of Title VII disputes.
Metz v Merrill Lynch Pierce Fenner & Smith, 39 F3d 1482 (1994). Held that employer had waived right to compel arbitration in this case. Recognized general validity of pre-dispute agreements to arbitrate statutory claims.
Paladino v Avnet Computer Technologies, Inc., 134 F3d 1054 (1998). Held that pre-dispute arbitration agreement set forth in handbook not enforceable because of restrictions on remedies. Concurring opinion makes reference to the problems posed by the employee”s responsibility for half of the “hefty cost” of arbitration under commercial rules.
Brisentine v. Stone & Webster Engineering Corp., 117 F.3d 519 (11th Cir. 1997) announced a three-part test for determining whether statutory claims are covered by an arbitration agreement: (a) Did the employee give his individual consent? (consent by a union in a collective bargaining agreement is not enough); (b) Does the agreement authorize the arbitrator to resolve statutory claims? (c) Does the employee have the right to insist upon arbitration if the grievance is not resolved to his satisfaction in the preliminary steps of the grievance procedure? This test is borrowed from the Supreme Court’s Mitsubishi opinion regarding commercial arbitration. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614 (1985).
If you have questions about an employment arbitration agreement that you signed with an employer or FINRA member firm, The White Law Group may be able to help. To speak with a securities employment attorney, call the firm at 312-238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida. With over 30 years of securities law experience, including experience working at FINRA (f/k/a the NASD) and the SEC, The White Law Group has the expertise to help investors defrauded in securities, investment and financial business transactions.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.