With the current hyper-vigilant compliance culture permeating FINRA member firms, the odds of being terminated and having a blemish on your U5 are ever-increasing. The best move you can make in protecting yourself and your business is to engage an attorney early in the process.
If you know that you will be leaving a FINRA member firm, voluntarily or involuntarily, secure an attorney to advocate on your behalf throughout the process. After all, you spent years building your business; spending a little money now to protect your future is a wise investment, especially if you see a transition on the horizon.
AdvisorLaw provides all relevant transition services for advisors making a voluntary or involuntary move. If you are blindsided by a termination, customer dispute, or internal investigation, there are several considerations for determining how to proceed:
1. Your reputation is vital.
When you’ve spent years building your reputation with clients and the general public, an inartfully crafted Form U5 can cause irreparable damage to your name and business. Today, FINRA member firms are plagued with compliance concerns that oftentimes cause them to terminate advisors for minor things that would barely have warranted a reprimand in the past. This tendency to overreact can lead to overreporting on the Form U5, which can be defamatory to an advisor. If your reputation has been damaged by a Form U5, you have one opportunity to bring an action to expunge it from your record in front of a FINRA arbitration panel. Don’t squander that opportunity with inexperienced local counsel — seek out the best attorney to protect your reputation with AdvisorLaw.
2. Weigh your losses.
Lost wages, harm to your reputation, and other damages may be sought through FINRA arbitration. Seeking significant financial compensation can be worthwhile. However, absent some egregious circumstances, you are unlikely to walk away with more than you would have earned by continuing to work at a FINRA member firm. This calculation is important in considering whether to seek damages in addition to expungement, as the process can often be more contentious and delayed when significant monetary compensation is sought.
3. Timing is everything.
In today’s world, outside factors, such as COVID-19, social media, and politics, can influence the arbitration landscape. Having counsel representing you as soon as you know that a change is imminent will enable you to attack all challenges head-on. It’s important to hire an advocate as soon as possible.
AdvisorLaw represents advisors in all aspects of their businesses. Whether you are under investigation, looking to transition firms, seeking to sell your business, or wanting representation to prevent an overzealous member firm from slandering your reputation, AdvisorLaw can help protect your business.
AdvisorLaw’s services were created exclusively for financial advisors—contact us for a free consultation about our RIA compliance services.
Zack Morse, J.D.
Director of Litigation