Wednesday, November 30, 2016

Don't Overstate Your Book!

Today's lesson - do not overstate your book when changing firms.

While that seems to make sense, apparently it escapes some folks that if you tell your prospective employer that you have $700,000 in annual revenue, and you have zero, they are going to catch on to your lie soon enough, and they are going to be upset.

A FINRA arbitration panel recently ordered a broker to pay Jeffrey Matthews Financial Group $260,000 after the broker failed to appear at the arbitration hearing. The arbitration decision does not provide any details, but Investment News has the back story.

Apparently Jeffrey Matthews Financial Group was not happy when it learned that it's recent hire, who claimed to have $700,000 in revenue in his book, did not bring in a single client to the firm, and the firm decided that the $700,000 representation was not true. The firm sued for $200,000, which was the bonus they gave the broker, and although the broker filed an answer, he did not appear at the hearing.

The arbitration panel awarded the firm $260,000.

There is an unanswered questions however - how did the BD not verify the trailing 12? Simple process to do so, and because it did not, it was out $200,000, paid its attorneys to bring the claim, and now has to attempt to enforce the award against the broker.

A little more time in the hiring process might have avoided all of his.

Finra panel: Broker owes former employer $260,000 after allegedly overstating book of business


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Sallah Astarita & Cox is a national law firm representing brokers and investors across the country in securities litigation and regulatory matters. Visit the firm at their website, call 212-509-6544 or email them to see if they can help you with your securities law matter.



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