Tuesday, January 3, 2017

Fired $1M adviser wins $417K case against Southwest Securities for wrongful termination

A broker who generated $1 million in annual revenue won a $417,000 case against her former employer, Southwest Securities, for wrongful termination from a FINRA arbitration panel.

According to the OWS article, the broker was contacted for an audit by a state regulator. The broker reached out to the firm for assistance, and the firm did not provide any meaningful assistance to her. A week after the broker asked for assistance, that did not occur, the firm fired the broker for failing to cooperate....with the audit!

A pretty outrageous series of events, and while there may be a question as to how much "assistance" the firm is required to provide, the firm does have an obligation to work with the broker in comply with an audit. Failing to provide that assistance, and then firing the broker for not cooperating with the audit, smells of a termination having more to do with stealing the broker's clients than anything else.

The Panel ordered a reformation of the brokers U-5, and $417,000 in damages, but according to the article, the broker lost her entire book of clients and sought $2.4 million in damages.

I don't know what her actual damages were, but I see this result far too often in my representation of brokers and advisers. The damage award is nice, and the expungement is great, but the damages occurred years ago, the broker lost all of her practice, and suffered with the dirty CRD report for an extended period of time.

Brokers need to get experienced securities counsel involved when these types of issues arise. Waiting until the damage is done can result in a recovery, but a proactive posture may lessen those damages, if not to eliminate them entirely.

Fired $1M adviser wins $417K case against Southwest Securities for wrongful termination
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