Financial Services Litigation and FINRA Arbitration

Belcher Fitzgerald’s FINRA arbitration attorneys have a proud history of both assisting investors who have suffered losses due to investment fraud and other misconduct by their brokers and financial advisors, and defending  financial services professionals against claims by disgruntled customers simply seeking to recover ordinary market losses that are the result not of any wrongdoing. Yes, we represent both sides. Why? Because we firmly believe it makes us better lawyers. And having assessed cases from both sides of a dispute better enables us to pragmatically assess the relative strengths and weaknesses of a case. As a result, our clients benefit from our practical, broad-based experience so cases that should be resolved short of scorched earth litigation often are.

Our broad experience includes allegations of sales practice violations ranging from:

• investment fraud
• unsuitable recommendations
• misrepresentation
• unauthorized trading
• churning
• breach of fiduciary duty
• failure to supervise
• selling away
• misappropriation of customer funds

Our experience spans a diverse array of financial products, such as individual stocks, mutual funds, variable and fixed annuities, managed accounts, 529 plans, private placements, and structured products. For a confidential consultation with one of our experienced FINRA investment fraud attorneys, please contact us.

Financial services firms are constantly vying to attract top-producing brokers, and industry incentives can be quite lucrative for brokers seeking to transition from one firm to another.  Belcher Fitzgerald’s FINRA arbitration attorneys are adept at both advising advisors and broker-dealers how to avoid disputes and unnecessary disruption in the recruitment and transition process, and in litigating claims arising from such transitions. We have a deep bench of experience in transition-related claims including violations of contractual restrictive covenants such as non-solicitation agreements, employee raiding, and other legal duties. These matters also often involve allegations of trade secret misappropriation and violations of client privacy, including local and federal privacy regulations concerning the safeguarding of client financial information.

Our FINRA arbitration attorneys are also well versed in the industry’s Protocol for Broker Recruiting, an agreement among certain broker-dealers dictating whether and what information advisors may take with them to their new firms, and how their resignations and transitions should be effected in order to avoid legal actions including restraining orders, injunctions, and FINRA arbitration.

We have obtained and defended against preliminary and permanent injunctions in courts and FINRA arbitration proceedings throughout New England, the Mid-Atlantic and nationwide, often securing significant monetary damages on behalf of clients.  In all matters, we are laser focused on minimizing the disruption to business, helping our clients protect and preserve valuable customer goodwill, and maintaining compliance with applicable regulatory requirements.

A common incentive feature in financial advisor recruiting is the payment of upfront compensation, typically tied to the advisor’s production at his or her prior firm. Hiring firms generally structure such payments as promissory notes and employee forgivable loans over a period of years.  If the advisor terminates employment prior to full repayment or forgiveness, the broker-dealer generally demands that the remaining balance be paid in full.  Belcher Fitzgerald’s FINRA arbitration attorneys regularly represent financial services firms in proceedings to enforce employee promissory notes and forgivable loans. Similarly, we also counsel departing employees with respect to defending and/or structuring terms for the resolution of such agreements so as to avoid costly litigation or arbitration proceedings.

When a registered representative terminates employment with a broker-dealer, the firm is required to file with FINRA a Form U5 termination notice. If the advisor was terminated or permitted to resign, the broker-dealer must list a reason for the termination and that description of the circumstances of the termination can have a significant effect on an advisor’s future employment potential.  For example, if the description is false, defamatory, misleading or otherwise incomplete or inaccurate, future employers may be less inclined to hire the advisor. In addition, the reason for the termination may appear as a disclosure event on the advisor’s FINRA CRD or Broker Check reports, which are available to potential new employers and to customers and potential customers who may be considering whether to entrust their important financial matters to an advisor.

Sometimes defamatory, misleading or untrue U5 descriptions are made intentionally by the former employer in order to thwart competition by the advisor at a new firm. In other cases, it may simply be the result of inartful language used by compliance staff completing the form. Either way, Belcher Fitzgerald’s FINRA arbitration attorneys can assist in pursuing claims for defamation, money damages and an order or voluntary agreement by the former employer expunging or modifying the termination reason listed in the Form U5.

Are you a facing a FINRA investigation, enforcement proceeding or disciplinary action?

Belcher Fitzgerald’s securities arbitration lawyers defend broker dealers and professionals facing Financial Industry Regulatory Authority (FINRA) investigations and regulatory proceedings.

FINRA Rule 8210 Demand for Documents, Information or Testimony

By the time you receive a Rule 8210 request from FINRA to provide information, documents or an on-the-record (“OTR”) interview, FINRA has already begun an investigation into your conduct. Frequently, the investigation will have sprung from disclosures made in Form U5 termination filings, claims made by individual investors in FINRA arbitration proceedings, state securities regulators, or FINRA branch examinations.

While you may take issue with the allegations or nature of the requests for information, the consequence of simply not cooperating are severe, most likely constituting being barred from working in the securities industry. So, you need to take it seriously.

You have the right to counsel and you should promptly exercise that right even if you believe you have done nothing improper. We can work with you to attempt to prevent escalation to a full-scale enforcement action, to prepare for and limit any potential unforced errors in an OTR, and to avoid public disclosure on the Central Registration Depository (CRD).

If you are or expect to become the subject of a FINRA inquiry or investigation, contact us as early as possible to learn your rights and options.