If you've been terminated from a broker-dealer, regardless of the label placed on it such as a discharge or permitted to resign or even a voluntary termination under the cloud of an internal investigation, you've probably got some significant questions. What do I do now? How will this affect my career in the future? Here are a few things that we think you need to know if you find yourself in this situation.
First, the language of your Form U5 that will be filed by your now former firm is vitally important. This language used and the disclosures placed on the U5 can affect your ability to work in other firms. Second, this language may be publicly disclosable and made available to clients, prospective clients, potential employing firms, as well as the competition. Third, the disclosures on the U5 may trigger a regulatory examination that could lead to a protracted investigation and may end in some type of disciplinary action against you.
What do you do? Get a lawyer involved to immediately speak with your former firm. While they won't negotiate the language of the U5, most broker-dealers are receptive to having discussions with your counsel, reviewing their proposed U5 language, receiving comments on that, and trying to work out language that will both satisfy their regulatory obligations but also the language that will be acceptable to the now departed broker.
Second, know your obligations to your former firm. Are you subject to any covenants not to compete? What about any other restrictive covenants? These are not necessarily all that common in the broker-dealer industry, but these are part of some brokers' employment or registered representative agreements. Understand these obligations so that you know what you can do, and importantly, what you can't do.
Third, know that confidential information is still confidential. Don't violate Regulation S-P. Don't misuse non-public, confidential customer information.
Fourth, think about possible regulatory action. If it appears that you're going to face a regulatory investigation based on the disclosures that are being made on your Form U5, be careful about what you share about what happened and how you share it. Problematic areas here include written explanations to prospective firms about what happened at your last firm, as well as less than honest rebuttals that you place on your next U4. Both of these can be problematic and can cause you problems with the regulators.
Fifth, if you have a promissory note or forgivable loan situation, obviously you're going to need to resolve that. It may make sense to go ahead and get out in front of this as soon as you can and to explore whether you have any potential counterclaims that you might be able to exercise against the note. Get counsel involved. Have him or her help you through this situation so that you can come out of this in the most favorable position possible. The situation can be very serious, and you need to treat it as such.
If a broker-dealer has recently terminated you, we'd be happy to speak with you about your situation and your goals, and see if we can be of service.
If you're facing a FINRA examination, click here to get information you need to know, and to request a free copy of Joel Beck's book, The Financial Advisor's Guide to Regulatory Investigations.
There are no comments for this post. Be the first and Add your Comment below.
Leave a Comment