Whom does AdvisorLaw represent?
All financial advisors, brokers, registered representatives, and wealth managers whether regulated by FINRA, individual states, or the SEC.
What services does AdvisorLaw offer?
Is AdvisorLaw affiliated with FINRA?
No. AdvisorLaw is an independent firm defending the interests of individual financial advisors in respect to regulatory matters.
What is the CRD?
The Central Registration Depository (CRD) is a database of all financial advisors (and member firms) that FINRA maintains and oversees via authorization from the SEC. The CRD includes all pertinent information relating to a specific financial advisor including employment history, licensure, and disciplinary disclosures.
What is BrokerCheck?
How do I check my own BrokerCheck profile?
How do I check my own BrokerCheck profile?
How much does AdvisorLaw charge?
A majority of our services are retainer-based, earned through billable hours. Billable hours represent the time spent on a particular case to productively move the case forward. For some services, such as customer dispute expungement, we charge a flat fee that is tiered based upon how many disclosures an advisor is seeking to remove.
Will my firm pay for AdvisorLaw?
Each advisor should contact their manager or internal risk compliance officer to verify. Some firms will pay directly for AdvisorLaw services. On occasion, advisors have also been allowed to use their internal pre-tax business development accounts. In the case of new disputes brought against an advisor, many times, your E&O insurance carrier will offset the majority of the cost.
Are services through AdvisorLaw tax-deductible?
Possibly. W-2 employees may have options to expense AdvisorLaw services through their business development accounts, depending on their firm and availability. 1099-based advisors may be able to deduct our services as any typical business expense. Always consult your CPA for exact advice.
Which states does AdvisorLaw cover?
All 50 states and Puerto Rico.
Who works at AdvisorLaw?
Is AdvisorLaw a law firm?
AdvisorLaw is not a law firm and does not offer legal advice. AdvisorLaw represents brokers in all 50-states and, as such, must comply with the unique requirements of each state. AdvisorLaw spent almost two years working with the Office of Attorney Regulatory Counsel to implement an appropriate structure for AdvisorLaw. Ultimately, the proper mechanism that we were instructed to use is how we are now operating. This allows AdvisorLaw to maintain its obligations to our clients, regardless of their location, while adhering to each state's unique requirements.
What allegations can an investor bring against a financial advisor?
The most common allegations brought by investors against their advisor are: breach of fiduciary duty, negligence, failure to supervise, misrepresentation, suitability, breach of contract, fraud, and unauthorized trading. Disputes are typically lodged in cases where the investor has had a decrease in their portfolio. However, many investors who have had positive returns on their portfolio have brought a complaint alleging that the returns should have been even higher. These days, under FINRA’s rules, investors can bring a compliant for virtually any grievance or concern.
What if the investor is lying, or the allegations are frivolous?
Nearly every investor allegation, even claims that are patently false or impossible, will show up on an advisor’s BrokerCheck record, per the extremely stringent rules of FINRA. Many financial professionals are unaware that they may fight the allegations and disclosure, even in the case of settlement by the member firm.
Will I have to contribute any money if my firm offers a financial settlement to my client?
This will depend on your firm and what culpability they assign to you in the dispute. Firms routinely settle with customers, regardless of the allegations, simply to avert litigation. You may be required to pay out-of-pocket, reverse commissions, or tap into your E&O insurance to contribute.
Does my internal firm compliance represent me?
Internal firm compliance attorneys only represent the interests of their benefactor: the firm. If you choose to be represented by firm attorneys, you should be advised of the inherent conflict of interest of representing two parties (firm and advisor) whose interests may not perfectly align. You may wish to hire outside counsel if you feel that you are being forced to contribute to a settlement or are being saddled with a negative disclosure that you never earned.
Do BrokerCheck disclosures affect my career?
What is the best language for the “Broker Comment” section on the U4 dispute disclosure?
Short and succinct is generally the correct response in the Broker Comment section of the U4 disclosure. It is highly advised to have an attorney review that language, not only as a response to the claims, but as part of a larger overall case, if seeking expungement.
Will my firm terminate me for receiving a client complaint on my Form U4?
It depends on the nature of the customer allegations. If there was a violation of firm policy or FINRA regulation, the firm may move to simply terminate instead of mitigating the damage. With each customer complaint, FINRA will initiate an inquiry to determine the severity of the alleged transgressions. If you determine that you are likely to be terminated, you should hire outside counsel immediately. The termination itself may initiate yet another negative BrokerCheck disclosure for the same underlying event.
Will a new customer claim affect state licensing?
Yes, most states mirror the information contained on the CRD and IARD and, therefore, will be acutely aware of any new client complaint. You may receive disclosures from one or more states in addition to the customer complaint disclosure posted by your firm. At the very least, you are likely to have to explain the negative disclosure each and every time you register or renew your licensure.
Is FINRA going to send me an inquiry letter regarding this client allegation?
Nearly every customer dispute will initiate an inquiry letter from FINRA to determine the severity of the occurrence and whether or not any FINRA statutes or regulations have been broken. Any indication that the event is not isolated, or that an advisor has broken a rule, will result in a formal regulatory investigation.
NEW U5 TERMINATION
Is an Employment Separation After Allegations disclosure the same as a U5 Termination?
Yes. The Employment Separation After Allegations (ESAA) is the title of the disclosure that you will receive for being terminated from a registered firm. An ESAA is the public disclosure listed on BrokerCheck. That is essentially the same as a “U5 Termination,” which references industry jargon for the form that broker-dealers must use to terminate your registration with their firm.
Will I always receive a BrokerCheck disclosure when terminated from my firm?
Not always. For any termination of an advisor or their duties, the firm must file a Form U5. However, the specific boxes that the compliance individual checks will determine whether your termination will become a public event listed on BrokerCheck. It is in an advisor’s best interest to learn this as soon as possible, in order to take steps to mitigate any potential public disclosure.
What are the possible options for “Termination Type” section of the disclosure?
Discharged, Permitted to Resign, Voluntary, or Other.
Can I change the language listed for my termination disclosure?
The Allegations portion of your U5 disclosure is input by the terminating firm’s compliance. You may negotiate the exact language within 30 days of termination. The Broker Comment section is where you may submit your response to the allegations (with FINRA approval).
Can I sue my broker-dealer or firm for my termination disclosure?
Depending on the facts of your case, you may initiate a FINRA arbitration case against your former firm, alleging a basis for wrongful termination. There may also be a basis for monetary damages against your former employer, depending on several factors.
Will this disclosure affect my ability to move to a new firm?
In today’s regulatory environment, the U5 Termination is widely considered to be one of the worst disclosures you can have for landing at a new firm. Many top-tier firms have rules against having even a single U5 disclosure. Depending on the advisor, some firms will hire a broker with a checkered past contingent upon a probationary period. Lastly, there are a few lower-tier firms that may choose to look past the disclosure entirely.
Can I negotiate the payback of my forgivable note?
Generally, yes, you may negotiate any loans due upon termination. Each forgivable loan contract is different and would need to be reviewed by an attorney for an actual opinion.
Can my old firm use my BrokerCheck disclosures to retain my clients?
Firms will typically not leave any physical record of misleading your clients with your BrokerCheck disclosures, in order to retain them, given the risks of defamation claims. However, leveraging a newly-public disclosure (or disclosures) is a widely-accepted practice among industry veterans when a mass exodus of clients hangs in the balance.
Is FINRA going to send me an inquiry letter regarding this client dispute?
Generally, any allegations of breaking firm policy, or possibly FINRA regulations, will result in a FINRA inquiry letter to determine both the severity of the events and whether other investors were harmed by the advisor or member firm.