Brokerage Firm Disputes
The modern securities industry is complex, varied, lucrative, and very highly regulated because it is so integral to our economy. It is also, not surprisingly, the source of many disputes both between industry members and the investing public, and between members of the industry. While most of the publicity about disputes in the industry focuses on claims by investors against an industry members, a considerable number involve disputes between brokerage firms, between brokers and brokerage firms, and by regulatory bodies and both brokers and brokerage firms.
The rules of the Financial Industry Regulatory Authority (FINRA) require arbitration for adjudicating the vast majority of internal securities industry disputes. Arbitration at FINRA is mandatory for disputes which:
- Involve broker versus broker, brokerage firm versus brokerage firm, or broker versus brokerage firm.
- Derive from the conduct of the parties’ business activities in the securities business.
Even without an arbitration agreements disputes between or among members and associated persons can be arbitrated at FINRA as long as the case is filed no more than 6 years from the date from which the claims arise.
Disputes between Brokerage Firms
There are three basic types of disputes between brokerage firms:
- Disputes over the terms of any business the firms conduct directly between themselves.
- Disputes over the respective rights of the firms when they operate jointly in dealings with investors, which is common when public securities offerings are so large that underwriting is syndicated or handled by more than one firm.
- Claims by one firm that another firm is raiding its employees/brokers.
Disputes between Brokers
Individual brokers interact in many ways, and any interaction in a field that handles huge sums of money can lead to disputes. These may involve:
- Referral agreements
- Purchases of customer “books” from retiring brokers
Disputes between Brokers and their Employing Firms
The nature of the relationship between brokers and the firms for whom they work generates disputes over many, many things. Among the most common subjects of disputes are:
- Compensation, including performance and hiring bonuses.
- Compliance with restrictions on competition.
- Broker use of proprietary information.
- General employment conditions (including alleged discrimination on various grounds).
- Whether brokers are complying with the firm’s rules and the laws and rules of the securities industry.
Disputes Related to Regulatory Filings
Regulatory bodies control the very right of the participants in the investment field to pursue their livelihood, and collect considerable information from and about these participants. The Financial Industry Regulatory Authority (FINRA) in particular plays a major role in determining who may work in the field, as well as collecting information for themselves and the various state regulatory agencies about each participant, some of which is available to the public once collected through FINRA BrokerCheck.
The importance of such stored information on the hiring and registration process cannot be overstated.The potential for information to be erroneous or incomplete, gives rise to a great many disputes. Two of the most common disputes concern:
- That the brokerage firm improperly “languaged” the broker’s Form U-5, which brokerage firms have to file whenever a broker terminates employment from the firm; brokers and firms frequently end up in disputes with firms over claimed errors, omissions, and misrepresentations that can hurt a broker’s career.
- That the brokerage firm misstated the basis for termination on the broker’s Central Registration Depository Record (CRD), which contains the combined information from both Form U-4’s and Form U-5’s and any amendments thereto. The CRD contains complaints from investors, regulatory actions and causes of termination which, through FINRA’s BrokerCheck, can appear in the public record.Often these fights can include whether perceived errors, omissions and misrepresentations can be expunged from the broker’s record.
Get Targeted Legal Help in Palm Beach County
Whatever the investment industry dispute you face, you know the case is likely to be difficult and probably contested vigorously by the other side. Getting an experienced Florida securities lawyer involved early offers the best opportunity to achieve a quick and satisfactory resolution of the dispute.
Whatever the dispute, and whatever your role in the industry, Boca Raton, Florida, securities attorney Todd A. Zuckerbrod can help. He has experience as a regulator for the New York Stock Exchange, as in-house counsel with Merrill Lynch, as outside counsel with the law firm of Greenberg Traurig, as the general counsel of a brokerage firm and in private practice securities lawyer in Florida.
Call Todd A. Zuckerbrod for a free initial consultation. He can start by figuring out whether you have to arbitrate at FINRA, whether it would be in your interest to do so regardless of whether it’s mandatory, and, most importantly of all, whether a settlement is feasible before the dispute begins eating up your time and money. Statutory time restrictions apply, so call now.