Skip to Main Content
SUBMIT A TIP RECEIVE DAILY NEWS
Menu AdvisorHub
  • News
      • Latest News
          • This Week's Top Stories- UBS Raises Payout Hurdles and Reorganizes Field, Ameriprise Rescinds Controversial Indie Fee, J.P. Morgan Melds Advisory Businesses, and Other NewsThis Week’s Top Stories: UBS Raises Payout Hurdles and Reorganizes Field, Ameriprise Rescinds Controversial Indie Fee, J.P. Morgan Melds Advisory Businesses, and Other News
          • Shareholders-File-To-Block-Advisor-Groups-Ladenburg-Takeover-772x485Shareholders File to Block Advisor Group’s Ladenburg Takeover
          • Ubs-Hit-With-Biggest-Finra-Employee-Arbitration-Penalty-Of-YearUBS Hit with Biggest Finra Employee Arbitration Penalty of Year
          • 2020-Comp-Wells-Adds-More-Large-Account-Incentives-For-Brokers2020 Comp: Wells Adds More Large-Account Incentives for Brokers
        • Close
      • Advisor Moves
          • 5-Mln-Merrill-Team-In-Texas-Shuffles-To-Wells-Fargo$4.5-Mln Merrill Team in Texas Shuffles to Wells Fargo
          • Ubs-Hires-From-Merrill-Morgan-Stanley-Loses-Ohio-Vet-To-RayjayUBS Hires from Merrill, Morgan Stanley, Loses Ohio Vet to RayJay
          • Cetera , HMC Partners McEachran and John HardyCetera Scores $2.6-Million LPL Team in North Carolina
          • wire-wars-morgan-stanley-adds-another-ubs-teamWire Wars: Morgan Stanley Adds Another UBS Team
        • Close
      • Enforcement
          • J-P-Morgan-Schwab-Win-Orders-Handcuffing-Breakaway-BrokersJ.P. Morgan, Schwab Win Orders Handcuffing Breakaway Brokers
          • Merrill-Raymond-James-To-Pay-12-Million-For-529-Plan-Sales-ViolationsMerrill, Raymond James to Pay $12 Million for 529 Plan Sales Violations
          • J-P-Morgan-Seeks-Tro-Against-Florida-Broker-Who-Joined-UbsJ.P. Morgan Seeks TRO Against Florida Broker Who Joined UBS
          • Massachusetts-Fines-Morgan-Stanley-For-Brokers-Excessive-TradingMassachusetts Fines Morgan Stanley for Broker’s Excessive Trading
        • Close
      • Opinion
          • Investor-Confidence-In-Stocks-Rightly-Declines-Opinion-772x485Investor Confidence in Stocks Rightly Declines: Opinion
          • Opinion-Schwabs-Zero-Commission-Decision-Challenges-Its-Ria-ClientsOpinion: Schwab’s Zero Commission Decision Challenges Its RIA Clients
          • Hedge Funds Binged on GE Stock Before Worst Rout in 11 YearsMillennials’ Portfolios Should Start to Leave Home: Nir Kaissar
          • Barry-Ritholtz-Secs-New-Best-Interest-Rule-Is-Far-From-Best-For-InvestorsBarry Ritholtz: SEC’s New ‘Best Interest’ Rule Is Far From Best for Investors
        • Close
      • Fintech News
          • Need-To-Move-1-6-Billion-Bank-Of-America-Has-An-App-For-That-772x485Need to Move $1.6 Billion? Bank of America Has an App for That
          • Robinhood-Is-Back-In-Washingtons-Crosshairs-After-Leverage-GlitchRobinhood Is Back in Washington’s Crosshairs After Leverage Glitch
          • Robinhood-Traders-Discovered-A-Glitch-That-Gave-Them-Infinite-Leverage-772x485Robinhood Traders Discovered a Glitch That Gave Them ‘Infinite Leverage’
          • U-S-Bank-To-Cut-Thousands-Of-Branch-Workers-In-Digital-PushU.S. Bank to Cut Thousands of Branch Workers in Digital Push
        • Close
      • From the Publisher
          • Richard Frick, Managing Partner and CEO of Gladstone Wealth GroupSeven Questions with Tony Sirianni: Richard Frick of Gladstone Wealth Group
          • Elizabeth Koehler-772×485Seven Questions with Tony Sirianni: BlackRock’s Elizabeth Koehler
          • David CanterSeven Questions with Tony Sirianni: Fidelity’s David Canter
          • 7 Questions Rich Whitworth 772×485Seven Questions with Tony Sirianni: Cetera Financial Group’s Richard Whitworth
          • Zero-Com-Just-Gave-Rias-A-21-Increase-In-Comp-OvernightSirianni: Zero Com just gave RIAs a 21% increase in Comp overnight
          • Chris Mone of WedbushSeven Questions with Tony Sirianni: Wedbush’s Chris Mone
          • Sirianni: You know you’re a European Broker when…Sirianni: You know you’re a European Broker when…
          • seven questions Craig Pirtle-772×485Seven Questions with Tony Sirianni: Craig Pirtle, Managing Director, B. Riley Wealth Management
        • Close
    • Close
  • Deals & Comp
  • Recruiting Wire
  • Resources
    • resources-home-menuResources Home
    • PRACTICE MANAGEMENT RESOURCESPractice Management Resources
    • Transition ResourcesTransition Resources
    • Fintech ResourcesFintech Resources
    • menu fintechFintech Product Directory
    • Boutique Wealth AdvisorsBoutique
    • EventsEvents
    • Close
  • Institute
  • Podcasts
  • Markets
    • Market-News-MenuMarkets
    • OUT OF THE BOX SERIES BY MARK GRANTOut of the Box Series by Mark Grant
    • Boutique Wealth AdvisorsBoutique
    • Close
  • RIA Center
close X
February 18, 2016

Broker Warns Bonus Arbitrations Are a “Fixed Game”

by Mason Braswell
|
News
|
Comments (1)
Share This
SUBMIT A TIP

Our article yesterday on Barclays’ pursuit of U.S. brokers who left with unvested balances on their promissory notes provoked a gloomy response from a reader in the compliance community. No matter how good a broker’s case may be to retain a signing bonus, the odds of prevailing in arbitration are oppressive.

Statistics bear him out. Employers won monetary damages in 94% of the 173 Finra arbitration cases involving promissory notes that were decided in 2015, according to Securities Arbitration Commentator, a New Jersey-based award research service that tracks data from arbitration awards.

The win rate for firms has prevailed for years and continues, according to the latest posting on Finra’s disciplinary action website. Indeed, this week’s list includes the cautionary tale of James Cady.

He sued Wells Fargo Advisors for dismissing him after five years on the job, only to have Wells successfully reply with a counterclaim for $335,000 it said it was owed on his promissory note. Cady, who is now with Oppenheimer & Co. in Red Bank, NJ, said when informed of the decision by AdvisorHub that he felt “totally screwed,” but declined to comment further.

We’ll let our source, who is fighting his own arbitration battle on another issue before Finra, spell out the moral:

“To ever win one of these [note] cases, you will have to practically have evidence on camera of a manager threatening you….I have seen arbitrations where firms have made outright material misstatements, faked evidence, [and had] witnesses and firm attorneys who outright lied, etc. The firms still WON their cases!”

It’s not lost on him that the brokers at Barclays have strong cases for leaving with their full awards since the British bank told them last year it was shuttering its U.S. brokerage business, just as Credit Suisse and Deutsche Bank did. (They would not have had the problem, to be sure, if they had gone to Stifel Financial, Barclays’ sanctioned choice.) But he’s not persuaded they can win.

“Here’s my advice to Barclays brokers: The firms will get their pound of flesh off you, eventually…You’re going to have to pay your note, plus [the firm’s] legal fees plus another $50,000 for your attorney.”

Several lawyers spelled out the theory behind what the uninitiated may see as a rigged game.

“The other side of the argument is that a loan is a loan is a loan is a loan,” said Brian Neville, who represents some former Barclays brokers who are in arbitration.

Arbitrators generally believe that the burden of proof is on the advisor to show they were fraudulently induced to join a firm or to prove in a counter-claim that their employer failed to deliver on recruiting promises, he and other attorneys have said.

So lick your wounds and take out your wallets if your former employer chases you down for note repayment, but think twice before you put up an expensive defense. It may be a difficult industry but it’s also unique in continuing to dangle multi-million-dollar signing bonuses before top brokers despite executives’ knowledge that they may never earn back the bonuses.

RESPOND TO RUMOR

NEXT: Hey, Guys, Give Raymond James Some Credit

Like this article? Let AdvisorHub come to you!  Sign up

Share This
Comments (1)
  • on Nov 15 2017, Victoria Townes says:

    Can my husband make me pay him for his transitional bonus in equitable distribution in a divorce?

    > Reply to Victoria Townes

Leave a Reply Cancel reply


Tony Sirianni Podcast Banner


NEWS

  • This Week’s Top Stories: UBS Raises Payout Hurdles and Reorganizes Field, Ameriprise Rescinds Controversial Indie Fee, J.P. Morgan Melds Advisory Businesses, and Other News

    This Week’s Top Stories: UBS Raises Payout Hurdles and Reorganizes Field, Ameriprise Rescinds Controversial Indie Fee, J.P. Morgan Melds Advisory Businesses, and Other News

    Dec 14, 2019
  • Shareholders File to Block Advisor Group’s Ladenburg Takeover

    Shareholders File to Block Advisor Group’s Ladenburg Takeover

    Dec 13, 2019
  • UBS Hit with Biggest Finra Employee Arbitration Penalty of Year

    UBS Hit with Biggest Finra Employee Arbitration Penalty of Year

    Dec 13, 2019
  • 2020 Comp: Wells Adds More Large-Account Incentives for Brokers

    2020 Comp: Wells Adds More Large-Account Incentives for Brokers

    Dec 12, 2019
  • Ameriprise Retracts Plan to Levy ‘Discretionary’ Fees on Indie Brokers

    Ameriprise Retracts Plan to Levy ‘Discretionary’ Fees on Indie Brokers

    Dec 12, 2019
  • J.P. Morgan Reorganizes U.S. Wealth Unit

    J.P. Morgan Reorganizes U.S. Wealth Unit

    Dec 11, 2019
  • $4.5-Mln Merrill Team in Texas Shuffles to Wells Fargo

    $4.5-Mln Merrill Team in Texas Shuffles to Wells Fargo

    Dec 11, 2019
  • UBS Hires from Merrill, Morgan Stanley, Loses Ohio Vet to RayJay

    UBS Hires from Merrill, Morgan Stanley, Loses Ohio Vet to RayJay

    Dec 11, 2019
  • Wells Fargo Joins Race to Zero Commissions

    Wells Fargo Joins Race to Zero Commissions

    Dec 10, 2019
  • UBS to Shutter Three Sales Regions, Revive Wealth Planning Position

    UBS to Shutter Three Sales Regions, Revive Wealth Planning Position

    Dec 10, 2019

Out of the Box by Mark Grant

Latest News 
Advisor Moves 
Enforcement 
Opinion 
  • About Us
  • Contact Us
  • Advertise
  • Events
  • Careers

 get our newsletter

Industry focused content and breaking news.

SIGN UP

Contact Us

Phone: 540-687-7003

PO Box 1232
Middleburg, VA 20118

311 W. 43rd St.,
12th Floor
New York, NY 10036

© 2019 AdvisorHub
  • |Terms of Use
  • |Privacy Policy
  • |Advertise
  • |Careers
  • Facebook
  • Linkedin
  • Twitter
  • Google

Back to top