Eccleston Law: For Investors. For Advisors
About
Who We Are
Testimonials
Disclaimers
Attorneys
For Advisors
Broker Transition
Transition Negotiations
Employment Matters
State Registration Problems & Discipline
FINRA Matters
Promissory Note Matters
Team/Parnership Disputes
CFP Board Matters
FINRA Enforcement Matters
State Registration Problems & Discipline
Transition Negotiations
Broker Litigation & Arbitration
Employment Matters
Regulatory Matters
Strategic Consulting
Whistleblower Law
Promissory Note Matters
Compliance Protection
Lawyer Referral Network
Expungement of CRD/BrokerCheck Disclosures
For Investors
Securities Fraud
Breach of Fiduciary Duty
Negligent Investment Management
Unauthorized Trading
Lawyer Referral Network
News & Articles
News
Articles
Financial Counsel Blog
Videos
Newsletter Signup
Contact
Site Menu
About
Who We Are
Testimonials
Disclaimers
Attorneys
For Advisors
For Advisors: Overview
Broker Transition
Broker Transition Overview
Transition Negotiations
Employment Matters
State Registration Problems & Discipline
FINRA Matters
Promissory Note Matters
Team/Parnership Disputes
CFP Board Matters
FINRA Enforcement Matters
State Registration Problems & Discipline
Transition Negotiations
Broker Litigation & Arbitration
Employment Matters
Regulatory Matters
Strategic Consulting
Whistleblower Law
Promissory Note Matters
Compliance Protection
Lawyer Referral Network
Expungement of CRD/BrokerCheck Disclosures
For Investors
For Investors: Overview
Securities Fraud
Breach of Fiduciary Duty
Negligent Investment Management
Unauthorized Trading
Lawyer Referral Network
News & Articles
News
Articles
Financial Counsel Blog
Videos
Newsletter Signup
Contact

Ameriprise Financial Loses Battle with Two Former Brokers

Posted on April 13th, 2016 at 10:50 AM
Ameriprise Financial Loses Battle with Two Former Brokers

From the Desk of Jim Eccleston at Eccleston Law LLC:

An effort to repossess stock awards from two advisers not only failed but produced costly consequences for Ameriprise Financial. In March, FINRA arbitration panels awarded the two advisers with more than $500,000 for Ameriprise’s alleged misconduct including unfair trade practices and breach of the Broker Protocol, a legal framework governing how advisers can transfer to new firms.

The conflict began when the two representatives left Ameriprise in January of 2014 to work with Janney Montgomery Scott. They worked in the same office, but, according to attorneys, were not a team. Before working with Ameriprise the two brokers worked in the advisory unit of H&R Block, which was sold to Ameriprise in 2008. Upon the acquisition, Ameriprise Financial, parent company of Ameriprise’s brokerage unit, issued a stock award to advisers as an incentive for them to stay on with the new firm. The stock award had a five year vesting period that ended January 2, 2014. One representative sold his shares four days after the vesting period and subsequently resigned on January 27, 2014.

The parent company quickly after tried to reclaim the stock awards by using the American Arbitration Association (AAA), claiming that, as a separate entity from the brokerage unit, it was not bound by the Broker Protocol. It then used this status to arbitrate outside of FINRA. This marked an unusual play in employment disputes between advisers and firms, as they are almost always resolved in FINRA’s arbitration process. In the event that the advisers had lost, a precedent might have been set allowing firms to dodge the protocol.

Fortunately for the brokers, they were able to use their W2 forms to trace the awards back to the Ameriprise brokerage unit. The parent company claimed that the brokers should repay the award on the grounds that they broke the contract by competing against Ameriprise Financial Services (the brokerage unit). However, the arbitrators with the AAA ruled in favor of the brokers, asserting that Ameriprise’s claims had no basis. In Griffith’s case arbitrator Wade stated that Ameriprise, “failed to carry its burden of proof to demonstrate that it suffered an actual loss due to the transfer of the stock to Griffith.”

The case presented before the AAA by Ameriprise contained important details that significantly affected the outcome. In review of the arbitration documents, there were irregularities. To begin, Ameriprise sought $567,000 from one representative, but when it came time for the hearing Ameriprise representatives revised its claim to $873,000. Ameriprise was adamant about the clarity of the incentive award leading up to the hearing, so the arbitrators were surprised by such a sudden increase in the figure. One arbitrator said, “[Ameriprise’s effort to ratchet up the damages against Respondent by a significant amount for the first time at the hearing, and its contentions that it was justified in doing so in the face of [Ameriprise’s] filings in the case, affected the credibility of [Ameriprise’s] claim.”

The final blow to Ameriprise came with parallel cases filed with FINRA in which the two brokers sought damages against Ameriprise for unfair trade practice and breach of Broker Protocol, among others. The two won an additional combined $505,000 for damages and attorney’s fees. The FINRA arbitration panel did not publicly explain its decisions which is customary. 

The attorneys of Eccleston Law LLC represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.

Related Attorneys: James J. Eccleston

Tags: Eccleston, Eccleston Law, Eccleston Law LLC, James Eccleston,

Share

Return to Archive

Latest Articles
SEC Announces 2021 Examination Priorities
March 4th, 2021 at 2:29 PM
FINRA Suspends Advisor Who Helped His Barred Father Service Clients
March 3rd, 2021 at 1:19 PM
Read More »
Latest News
CFP Board is the New Sheriff and it Is Not Your Friend
October 24th, 2020 at 10:04 AM
Defending Against a Customer Complaint First Requires Selecting Correct Legal Counsel
October 15th, 2020 at 10:02 AM
Read More »
Share

Request a Free Consultation

Attorneys are standing by during regular business hours. Call us now for immediate service, or complete the form below and we will contact you as soon as possible.

Your E-mail Address:
 
Chicago
55 West Monroe St.
Suite 610
Chicago, Illinois 60603
(312) 332-0000
(312) 332-0003
New York City
One Liberty Plaza
165 Broadway, 23rd Floor
New York, New York 10006
(312) 332-0000
(312) 332-0003
Boca Raton
2255 Glades Road
Suite 324A
Boca Raton, Florida 33431
(312) 332-0000
(312) 332-0003
2021 © Eccleston Law, LLC.
All Rights Reserved.
The law is continuously changing. Please do not rely on information found on this site without consulting a lawyer to determine if any recent changes in the law may have an impact.