Monday, August 3, 2009

Rise in Broker Employment Disputes Noted

As FINRA announces the significant increase in arbitration filings this year over last, many have assumed that the increase is caused by customers filing complaints against their brokers. That may not be the case.

Our law firm is seeing a marked increase in complaints by brokers over the termination of their employment at some of the major investment banks. We have confirmed with FINRA that the arbitration filing numbers include claims between brokers and firms. We have also confirmed that while FINRA breaks down its statistics for types of customer claims, in its total statistics it does not distinguish between customer cases and broker vs. firm cases.

The rise in cases filed in 2009 (which has now passed 4,000) may not be an indication of a significant increase in brokers accused of wrongful conduct, but rather an rise in disputes between brokers and firms as pressure mounts on firms to increase productivity and decrease costs.

Given the fact that we have witnessed a marked increase in inquiries from brokers at most of the major wirehouses over employment issues, the rise in arbitration claims may very well be in the broker-firm category of cases.

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