Securities Employment And Industry Disputes Lawyer

In the securities industry, it is commonplace for brokerage firms to incentivize financial advisors to switch their place of employment by offering large, up-front, lump sum payments. These lump sum payments are typically structured as promissory notes or, otherwise known as, Employee Forgivable Loans (EFLs). The terms of the EFL typically require the financial advisor to remain employed by the brokerage firm for a defined period of time. If the financial advisor remains employed for the proscribed period of time, the loan is forgiven, and the financial advisor is only responsible for paying the taxes. Conversely, if the financial advisor leaves the brokerage firm prior to the proscribed time period, the financial advisor is obligated to repay all or part of the loan to the brokerage firm.

EFLs are a frequent source of litigation between financial advisors and brokerage firms. Sometimes, as part of the employment recruiting process, financial advisors are given assurances that they will be able to pursue certain lines of businesses, continue to service certain clients, or have infrastructure and support staff at their disposal. Upon arrival, the financial advisor is faced with a different reality. In other words, the rules of the game are changed and, unfortunately, the financial advisor is contractually bound to remain employed at that brokerage firm unless he/she is financially willing and able to repay all amounts owed under the EFL agreement.

Financial advisors have certain defenses that can be raised to avoid enforcement of the EFL agreement, including:

In addition, financial advisors may pursue claims of their own that could negate some or all of their financial exposure, including:

  • Constructive discharge
  • Wrongful termination
  • Violation of state and federal employment laws

The Wolper Law Firm, P.A. has extensive experience handling matters involving labor and employment matters in the context of the financial serviced industry. If you have questions regarding your legal rights pursuant to an EFL agreement, please contact the Wolper Law Firm, P.A. for a free consultation and case evaluation.

Financial Advisor Transitioning Between Brokerage Firms:

When a financial advisor leaves one brokerage firm to become employed by another brokerage firm, the process can be complicated and, if not handled properly, result in damage to the financial advisor’s business and ability to transition and service his/her clients.

It is important that the financial advisor retain an attorney early in the process to make sure that it is managed properly and that the risk of litigation is minimized, where possible. The Wolper Law Firm, P.A. can assist in the transition process, which is broken down into four main steps:

  • Review of all contracts, promissory notes, non-compete and non-solicitation agreements, and employee forgivable loans (EFLs) signed by the financial advisor with his/her current brokerage firm;
  • Review and negotiation of all contracts, promissory notes, non-compete and non-solicitation agreements and employee forgivable loans (EFLs) proposed to be signed by the financial advisor with the new brokerage firm;
  • Steps that a financial advisor must take to effectively and legally transition his/her clients to the new brokerage firm; and
  • Securing deferred compensation or, alternatively, negotiating additional compensation to account for lost deferred compensation.

If you are a financial professional who is contemplating a change of employment, please contact The Wolper Law Firm, P.A. for a free consultation. The Wolper Law Firm, P.A. has the experience and depth to seamlessly navigate through the complex issues associated with your employment transition. While the approach should be designed to avoid litigation, to the extent litigation arises, the Wolper Law Firm, P.A. is prepared to aggressively represent your interests.


The securities industry is highly regulated. The Central Registration Depository (CRD) maintains professional licensing and disclosure information regarding all financial professionals that are registered representatives of a brokerage firm or advisory firm. The various regulatory documents are a Form U4, Form U5, and CRD. An abridged version of these documents is available in a system titled BrokerCheck, which is publicly available on the website for the Financial Industry Regulatory Authority (FINRA).

What many financial advisors and registered representatives do not appreciate is that every sales practice complaint made against them is reportable and that the employing brokerage firm has virtually no discretion when making a determination if a sales practice complaint should be reported. In instances where a customer files a complaint that is frivolous or has no merit, the brokerage firm must still accurately report that complaint and it will be reflected on the financial advisor’s Form U4, Form U5 (if applicable), CRD and BrokerCheck from that point forward and can easily be accessed by current and prospective customers. This often invites questions and skepticism with clients and prospects.

The only opportunity for financial advisors to remove the customer complaint from the aforementioned regulatory documents is to seek expungement. The process of expungement involves the filing a petition for expungement before the Financial Industry Regulatory Authority (FINRA) and attending a hearing before a panel of arbitrators (either in-person or by telephone), during which time evidence will be presented that supports one of the three enumerated grounds for expungement pursuant to FINRA Rule 2080:

(A) The claim, allegation or information is factually impossible or clearly erroneous;
(B) The registered person was not involved in the alleged investment-related sales practice violation, forgery, theft, misappropriation or conversion of funds; or
(C) The claim, allegation or information is false.

At the conclusion of the formal hearing, the arbitrators will issue an arbitration award with their findings. If successful, the arbitration award must then be confirmed in a summary (typically non-adversarial) court proceeding at which time the reported event will be expunged or erased from BrokerCheck and will no longer be publicly available.

The Wolper Law Firm, P.A. has extensive experience handling expungements on behalf of financial professionals. If you are a financial professional, and have questions regarding disclosures that appear on your Form U4, Form U5, CRD or BrokerCheck, contact the Wolper Law Firm, P.A. for a free consultation and evaluation of whether expungement of unwanted disclosures is an available remedy. Call 800.931.8452 to get started.

Attorney Matthew Wolper

Attorney Matthew WolperMatt Wolper is a trial lawyer who focuses exclusively on securities litigation and arbitration. Mr. Wolper has handled hundreds of securities matters nationwide before the Financial Industry Regulatory Authority (FINRA), American Arbitration Association (“AAA”), JAMS, and in state and federal court. Mr. Wolper has handled and tried cases involving complex financial products and strategies ranging from traditional stocks and bonds to options, margin and other securities-based lending products, closed/open-end mutual funds, structured products, hedge funds, and penny stocks. [Attorney Bio]