If you possess information about your company’s wrongdoing, or if you have suffered losses due to the action of your broker or brokerage firm, you may have certain legal rights that require your immediate attention. DON'T GO IT ALONE!
Remember, save all documents evidencing what was said to you or promised you and how you’ve been harmed economically. Realize that documents can be powerful weapons in defending a claim for promissory note repay or pursuing a claim against the firm.
"Winning a lawsuit, establishing the proof of claim, or obtaining proper restitution requires more than just reciting the facts of a case; the law requires you to meet a burden of proof. So, remember, the devil is in the details and thorough documentation is critical. Your greatest chance to prevail in a claim against your employer or to defend a claim by your employer will require representation by an experienced securites industry legal specialist! Tracy Stoneman of Stoneman Law is that specialist!"
Ms. Stoneman has defended stockbrokers in promissory note cases and represented stockbrokers in disputes with their firm. She has also defended stockbrokers in FINRA enforcement claims. Ms. Stoneman does not represent stockbrokers or brokerage firms in cases against investors. If you are a broker and have issues concerning your U-4 or U-5 with your current or former brokerage firm, need a promissory note defense, or believe you have been wrongfully treated by your employer, Ms. Stoneman may be able to help you.Types of Claims
A large percentage of FINRA arbitrations involve cases where the brokerage firm sues the broker for reimbursement of the amount due on the promissory note the broker signed when he joined the firm. The brokerage firms almost always win these cases UNLESS the broker has a crafty lawyer who can counterclaim with one of the claims below. The old saying, “The best defense is a good offense” is quite applicable in promissory note cases. If the broker has counterclaims that can be asserted (which of course depend on the facts of the case), oftentimes the amount owed under the promissory note can be reduced or eliminated completely in a best-case scenario.
Defamation is the act of damaging the good reputation of someone through slander or libel. Stockbrokers have brought defamation claims for untrue or misleading statements their brokerage firms made on the Form U-5. A derogatory term on the U-5 report can render a licensee unemployable and destroy his career.
The larger the broker’s book and production, the easier it is establishing damages.
In August 2016, a FINRA arbitration panel ordered Morgan Stanley to pay a fired Florida broker more than $2 million for defaming him on an inaccurate regulatory report and through discussions his former colleagues held with his customers. Though Morgan Stanley initiated the case to recoup part of a signing bonus, arbitrators awarded the broker $2.4 million and required Morgan Stanley to alter the U-5 form it filed with regulators to say he was “terminated without cause” and to delete its assertion that he was fired for conducting an outside business. The $2.4 million included over $700,000 in attorney's fees; almost $100,000 in costs and $500,000 in punitive damages.
Wrongful termination cases are often brought along with defamation cases, the gist of the claim being that the broker was wrongfully terminated. In March, 2016 an arbitration panel awarded an ex-broker more than $1.7 million from Wells Fargo for wrongful termination and other misconduct. The broker was terminated for not following Wells Fargo’s internal policy regarding contacting customers before orders. The panel awarded the broker more than $1.8 million, including attorney's fees. The arbitrators also ordered the expungement of the broker’s record; the reason for termination will be changed to "other" and the explanation to "terminated without cause".
A successful wrongful termination or defamation case can literally reverse the damage that a brokerage firm levies on a broker through its wrongful conduct, thereby putting the broker on a clean path going forward.
These cases arise when a broker is lured to a brokerage firm with a hefty upfront bonus (sometimes in the millions of dollars) in exchange for the broker bringing along his substantial book of business and being able to service his clients in a better way. The broker expects that he will be able to continue his level of production using the tools that the new firm provides. Then, to the surprise of the broker, the brokerage firm changes its business by eliminating those tools or otherwise hampering the broker's ability to service his clients. The broker is forced to leave and go elsewhere, however, the brokerage firm insists upon repayment of the promissory note consisting of the upfront bonus.
If these circumstances exist, the broker can file a counterclaim against the brokerage firm for "constructive discharge" and probably "fraudulent inducement", as well.
These cases are the rarest in FINRA arbitrations, because the broker may be able to file the claim in court. However, when documented facts establish that the brokerage firm intentionally treated the broker in a manner different from other employees on the basis of prohibited factors such as age, race, color, religion, sex, or national origin, such a case can be very valuable.