David R. Chase, P.A.
Call Us Now: 800-760-0912
David R. Chase, P.A.
Call Us Now: 800-760-0912

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How To Successfully Defend a Promissory Note and Employee Forgivable Loan FINRA Arbitration Claim

promissory note lawyer

While it is true that brokerage firms usually prevail in enforcing promissory note and employee forgivable loan claims in FINRA arbitrations, that is not always the case.  In my years of defending financial advisors in these matters, I have found that with certain facts and key evidence, the advisor has an opportunity to vigorously oppose enforcement of the promissory note or forgivable loan thus giving him a fighting chance at the final hearing and/or leverage to secure a fair and reasonable settlement.

Such cases usually involve the claim of fraud in the inducement, meaning that the brokerage firm made material misrepresentations or failed to disclose critical facts to the registered representative when pitching the employment opportunity.  Examples include representations about access to certain financial products or lines of business, compensation structures and bonuses, versatile platforms, synergies with affiliated bank divisions, travel and expense budgets, and exposure to new client generating opportunities.  It is, of course, based upon these promises and the allure of significant upfront monies that advisors make the decision to leave the security of their existing job and take a leap of faith with a new firm.

In these situations, where the firm’s key representations upon which the advisor relies prove to be untrue, and the advisor’s ability to generate revenues is significantly impaired as evidenced by a large drop in revenues as compared to his historical generation of revenues at the prior firm, the case becomes much more defensible.  This is especially true where the advisor has written (or digital) documentary evidence establishing: (1) the specific promises made by the firm during the negotiation process, (2) complaints to management once the breach of the key promises occurred, and (3) the decline in revenues suffered and/or the inability to accumulate new assets under management (AUM) directly due to the breaches.

In such a scenario, the advisor experiences tremendous financial loss and, ultimately, the ability to satisfy the financial obligations due under the employee forgivable loan or promissory note often forcing him out to seek new employment, but with far less in AUM and an earnings history for trailing twelve compensation calculations.  This often marks the beginning of the end of a professional career.

Unfortunately, this happens every day in the securities industry.  However, it does not stop the firms from seeking to aggressively collect every penny due under the promissory note from the departing broker in a FINRA arbitration claim.

My role as defense counsel in promissory note and employee forgivable loan cases is to aggressively and zealously represent the broker’s interests to leverage the best result given the facts, which often takes the form of a negotiated settlement where a percentage of the amount claimed due is paid, typically over time, with favorable terms.

If you are a registered representative or financial advisor who was fraudulently induced into signing a promissory note or forgivable loan and have been sued by your former employer in a FINRA arbitration case seeking over $500,000, call today for a free and confidential consultation.

Get Help from a Veteran Securities Industry Promissory Note Lawyer

David Chase, Esq. of the Law Firm of David R. Chase, is a former SEC prosecutor and veteran securities industry promissory note lawyer who represents brokers and financial advisors nationwide in high-stakes promissory note and forgivable loan arbitrations.  David is available for consultation toll-free at: 800-760-0912 or e-mail at: david@davidchaselaw.com, or you can visit his Firm’s website for more information and content at: www.davidchaselaw.com.

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