Tracy Stoneman - Stoneman Law
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Wrongful Termination

All states recognize "at will" employment, however many have restrictions and exemptions. An “at will” employee can be dismissed by an employer for any reason. The employer may have “just cause”, “unjust cause” or no cause at all.

Such liberalities do not extend to the stockbroker–brokerage firm relationship, though. When a firm and stockbroker part ways, the regulatory Form U-5 must be filled out and filed. In certain circumstances, this form requires an explanation of the circumstances surrounding the termination. This information will become public through the CRD system, including FINRA’s BrokerCheck. As you can imagine, this creates a setting ripe for the publication of defamatory or potentially defamatory remarks.

The publication of the reasons for termination, if false or not justified, gives rise to a wrongful termination by the stockbroker against the brokerage firm. In addition, the stockbroker would have a defamation or libel claim for the false information reported on the U-5 form.

Wrongful termination claims can arise for a whole host of reasons. Oftentimes, it arises due to ill will between the stockbroker and his branch manager. Sometimes the firm has an incentive to fire the broker before his vesting period expires delineated in the broker’s promissory note with the firm. It is very common when there is a wrongful termination claim, it is accompanied by a claim against the stockbroker for promissory note repayment.

Normally, wrongful termination involves an illegal firing, however, constructive discharge can also be a form of a wrongful termination claim. The stockbroker must prove that there was some sort of adversity that caused him to say, “I quit”, instead of waiting to hear, “You’re fired”. An example would be if the Branch Manager told the broker that unless he quit, he was going to make life miserable for him by taking accounts away from him and preventing him from making bonuses.

Good advice is that if you think you have a wrongful termination claim, to seek a lawyer as soon as possible. However, wrongful termination cases by their nature do not have damages unless the stockbroker cannot find work and has lost his client base. It takes time to see how things play out in terms of how the stockbroker is damaged. It is not uncommon in these cases for damages to be continuing through the arbitration hearing and into the future. Experts can be hired to place a value on the loss of future earnings. Do not delay seeking lawyer advice if you have been wrongfully terminated. The last thing you want to do is to delay the seeking of advice until more damages accrue when various statutes of limitations may restrict your claim.

It is difficult for stockbrokers to find good work at other brokerage firms when they have a termination on their record. I once evaluated a case where the stockbroker was clearly fired for the wrong reasons, yet he was able to get a job at another brokerage firm and was making more money than he was at his old firm. That was an example of great liability but no damages. It was also a rare scenario.

Wrongful termination claims, unless they are a particular type of discrimination claims, must be pursued through the FINRA arbitration process. This means they are handled like any other securities arbitration. Documents created by the firm at or around the time of firing are critical to discover and when these types of cases.

Claims of wrongful termination have been on the upswing at FINRA and stockbrokers are winning these claims and recovering not only compensatory damages but punitive damages, as well.

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Tracy was a wonderful lawyer in my and my husband's huge case against Prudential Securities. She was relentless in going after the stockbroker and firm, determined to obtain all of the documents that helped our case and hurt theirs (that's why the firm didn't want to produce them!). No matter what curve ball the brokerage firm threw, Tracy came up with an angle to overcome it. My husband always commented how smart Tracy was in handling our case. Throughout it all, Tracy was extremely cheerful and easy to work with - unlike most lawyers I know! Carolyn W.
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