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

Clever Independent Brokerage Firm Seeks to Circumvent Law and Hit Transitioning Reps Hard

Posted on July 21st, 2016 at 11:56 AM
Clever Independent Brokerage Firm Seeks to Circumvent Law and Hit Transitioning Reps Hard

From the Desk of Jim Eccleston at Eccleston Law LLC:

We recently examined a promissory note agreement for a rep considering a move to an independent brokerage firm.  We noted the following trap for the unwary broker, and are issuing this alert. 

Financial advisors must beware of the following two provisions, which firms increasingly may attempt to insert into the legal document:

1)            In an effort to circumvent state wage garnishment statutes, the rep as the borrower agrees to give the firm a security interest in all sums received or owing from any future employer (meaning, reps work for free as the paycheck is paid to the old firm); and

2)            While the normal collection attorney’s fees and costs provision is inserted, the agreement obligates the rep as the borrower to pay the greater of that sum or 15% of the unpaid balance of the note.  So a half million dollar note balance equates to $75,000 (or more if attorneys’ fees and costs are greater).

Advisors who transition, even under the protections afforded by the Protocol for Broker Recruiting, are strongly advised to retain counsel to review their legal documents before deciding to transition.

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
Advisor Barred for Failing To Comply with FINRA Enforcement Requests
April 9th, 2021 at 10:29 AM
Interactive Brokers and Schwab Plan to Fight $4.6 Million Arbitration Award
April 8th, 2021 at 2:30 PM
Read More »
Latest News
Affidavit of Merit Received in Eccleston Law’s $25 Million Legal Malpractice Action
April 1st, 2021 at 9:36 AM
Jim Eccleston Awarded Prestigious Recognition
February 26th, 2021 at 9:13 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.