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Financial Advisor Representation Attorney in
Dallas, Texas Serving Nationwide

One of the focuses of Simms Law, P.C., a boutique Florida law firm, is financial advisor representation, a very specialized field. Financial advisors, savvy in their own fields of expertise, are sometimes treated unfairly and find themselves in need of legal representation to protect their reputations and their livelihood. At such times, Simms Law, P.C. is ready and willing to provide knowledgeable and skilled legal counsel.

Representing Financial Advisors Throughout Florida and The Rest of The United States

Simms Law, P.C. is well-prepared to assist financial advisors in any of the following situations:

Promissory Note Actions

Financial advisors can find themselves in a difficult situation as a result of becoming involved with promissory notes, otherwise known as employee forgivable loans (EFLs). Promissory notes are loans used by brokerage firms primarily to attract financial advisors away from their present place of employment. In an effort to get desirable financial advisors to join their team, securities firms offer to pay financial advisors money upfront in order to begin a professional relationship. These offers are typically calculated based on the amount the advisor has earned in commissions during the preceding year.

What makes promissory notes complicated and often troublesome is that the notes are actually loans that the financial advisor typically must pay back to some extent, based on the terms of the EFL, in the event employment is terminated prior to the end of the loan term. If the financial advisor decides to leave the brokerage firm, the firm can usually demand immediate payment in full or accelerate the payment schedule.

If you are a financial advisor, you know how devastating this can be, both financially and emotionally, since it destabilizes your lifestyle. Not only is the EFL often a very large payment to be made all at once, but if it is not paid off immediately, a higher (default) rate of interest will typically be demanded. If this occurs, the promissory note becomes a nightmare, with interest increasing at an alarming rate and full repayment becoming increasingly harder to accomplish.

Most disturbing, if the promissory note is not paid off in a timely fashion, the brokerage firm can initiate a collection claim (usually a claim of breach of contract) against the financial advisor through FINRA. Because the FINRA regulations governing promissory notes are complicated and often confusing, it is absolutely essential to have an experienced securities attorney representing you.

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If you have Simms Law, P.C. on your side, you are in good hands. We understand the defenses against the collection and will carefully analyze your particular case to determine the best course of action. Defenses against collection include the following:

  • The brokerage firm misrepresented the offer

  • The brokerage firm committed prior “bad acts”

  • The promissory note was for an unconscionable amount

  • The EFL was void because it was against public policy

  • Usury was involved

  • The agreement was signed under undue influence or duress

  • The financial advisor was wrongfully terminated (due to discrimination, harassment, and retaliation for whistleblowing)

Lost Clients Due to Erroneous Information Received from Brokers or Dealers

Another area in which we assist financial advisors is when they have lost clients through no fault of their own, by recommending investments based on faulty information from their broker-dealer. We represent financial advisors before FINRA panels to prove that they have lost business as a result of being misled by their broker-dealer.

Financial Advisor Expungement of Disclosures

Another major reason financial advisors seek our help is that they need to have disclosures made on their Central Registration Depository (CRD) record expunged through the FINRA arbitration process. No financial advisor wants a black mark on his or her permanent record, least of all a registered financial advisor. While such a demerit can arise from a number of causes, the most frequent cause is a customer complaint.

It stands to reason that the longer you have been registered as an investor, the greater the likelihood that you will receive a complaint, no matter how careful and scrupulous you are. As soon as a customer complaint against you or your firm is received, it must be shared with FINRA, after which it will be entered into your BrokerCheck file. While this action serves the important purpose of making the system transparent and alerting the public and other investors to problems, it can have an unfairly negative impact on the financial advisor, particularly if the complaint is denied for lack of merit, or if a settlement is reached by the advisor’s broker-dealer for purely business reasons.

The Process of Expungement

FINRA has established a process through which certain CRD disclosures can be challenged and subsequently removed from the records entirely. This procedure, known as expungement, erases the complaint from legal memory. FINRA has set a high bar for expungement and financial advisors, therefore, need experienced and competent legal counsel to guide them through the process. Very specific guidelines and standards must be met in order to be eligible for expungement. The basis for expungement is governed by Finra Rule 2080. Under Section (b)(1) the conditions under which expungement may be granted are as follows:

  • (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.

Further, FINRA has recently proposed rule changes to the expungement process which will likely increase the financial cost to financial advisors seeking expungement and decrease the odds of success. Among other changes proposed by FINRA (the changes are currently pending SEC approval), three arbitrators will be required to sit on the panel hearing the expungement request and expungement can only be granted by unanimous consent of the arbitrators. Further, disclosures will only be eligible for expungement within one year of their publication on BrokerCheck. The proposed rule changes further increase the hurdles for brokers looking to clear their names in the wake of a customer complaint. If approved by the SEC, there will likely be a six-month grace period for financial advisors to seek expungement before the changes take effect.

The Special Services Simms Law, P.C. Provides

Our representation of financial advisors is comprehensive, covering: compensation issues, raiding-related claims, and matters pertaining to the successful transition from one firm to another. We also assist financial advisors who are seeking expungement of disclosures made on their CRD records through FINRA expungement proceedings.

If you are a financial advisor from anywhere nationwide seeking excellent legal representation, you should get in touch with Simms Law, P.C. We are well-credentialed and have earned a top reputation in the industry. You can reach us by phone or fill out one of the contact forms on our website.