Many of our broker dealer clients have problems with employees, financial advisors and independent contractors as it relates to customer complaints about how their accounts were handled. The complaints have ranged from account embezzlement, theft, document alteration, selling away, mismanagement, gross negligence, unsuitability, churning, elder abuse, forgery, failure to pay EFLs, and many more situations too numerous to detail here. What is worse, these customer complaints almost invariably trigger FINRA arbitrations.

While employees and others typically have indemnification agreements with the broker dealer, this is cold comfort if, as is many times the case, these individuals have little by way of a “deep pocket” and their acts are intentional so that insurance coverage is compromised. It is The Spencer Law Firm’s experience in judging these situations and developing a joint defense agreement, if deemed necessary, to secure the cooperation of the employee (current or former), the primary witnesses and to get as much information as possible to understand the full complexities of the problem. This is all a tricky process since conflicts of interest are something that has to be considered and dealt with properly. What may be good for the broker dealer may not be good for the employee.

We also assist broker dealer clients in handling routine employee issues, such as preparing and enforcing employee non-competes, nondisclosure and other provisions of employment agreements that are being violated. Often we have to file for injunctive relief from former employees who are calling on their old book of clients in violation of their contract. Many times these former employees need to be reminded of the agreement to not disparage their former employer and that the employee forward loans (“EFLs”) need to be repaid. Even in the best of times, former employees can cause a lot of damage to client relationships and to the firm’s bottom line. The Spencer Law Firm has represented the broker dealer in representing it in regards to customer disputes, employee failure to pay EFLs, losses in client accounts, forgeries, embezzlement, negligent handling of client accounts, churning, and the like.

Additionally, the broker dealer may be considered an “underwriter” in various business deals. What is problematic about being deemed an “underwriter” is that the strict liability of any sales fraud will be attributed to the underwriter as to the principal seller. If you have an arrangement with any private issuer to offer their securities through your broker dealer, we can assist with any arbitration or litigation that stems from this business arrangement.

The Spencer Law Firm has represented brokerage firms, underwriters, independent broker-dealers, insurance companies, registered representatives and compliance professionals in numerous arbitrations. While the amounts at stake have ranged from relatively small sums of money to millions, we take each case seriously and strategize with our clients, based on their business needs, to determine the best way to handle each matter. We are frequently called upon to handle those cases that “must be tried.” We have handled arbitrations involving traditional products like stocks, bonds, listed options and mutual funds, as well as third-party managed products, stock options, derivatives, and hedging tools. Our attorneys have experience with virtually every legal theory and every sales practice claim asserted in customer cases, ranging from securities fraud and breach of fiduciary duty to unsuitability, “defective products,” over-concentration, churning, unauthorized trading, mutual fund switching, selling away, Internet abuses and failure to supervise, among others.

Highly publicized state or federal investigations sometimes prompt investors to flood FINRA Dispute Resolution with mass filings of similar claims. A vigorous and well-coordinated defense strategy is essential in these situations. We have defended clients in dozens of arbitration proceedings involving claims of churning, unsuitability, unauthorized trading, failure to supervise, fraud and breach of fiduciary duty.

Regardless of your situation in relation to selling or investing process, The Spencer Law Firm can help. Call us toll-free at (888) 237-4529 or use our contact form today.