Short but Not Necessarily Sweet

Greener pastures await at another broker/dealer: I'm outta here. Adios. Sayonara. Kiss mywell, you get the idea. It's a heady moment when a rep leaves his firm. It also often sets in motion a series of showdowns over client ownership and compensation issues. One way to make things easier is to pay careful attention to your resignation letter. It would seem that crafting a goodbye note would be a simple

Greener pastures await at another broker/dealer: I'm outta here. Adios. Sayonara. Kiss my…well, you get the idea.

It's a heady moment when a rep leaves his firm. It also often sets in motion a series of showdowns over client ownership and compensation issues. One way to make things easier is to pay careful attention to your resignation letter. It would seem that crafting a goodbye note would be a simple matter, and indeed it is, as long as the departing rep follows a few important guidelines.

  1. Take care in timestamping the letter

    A rep should always date a resignation letter as of the day he transmitted it to the firm. Avoid writing the thing in advance and leaving it sitting around with a stale date. Further, if the letter is sent via email or fax, keep a copy of the confirmation to show the exact time of transmission.

    Why document the date and time? Simple: It's possible for a firm to argue that it fired a rep before he quit or the rep was permitted to resign. This, in fact, is a fairly common ploy. As such, a rep might need to prove exactly when he notified the firm of his departure. Unfortunately, with such disputes it's difficult to refute an employer's claim that it previously warned a rep to either quit or be fired. However, if a rep can show the date and time he resigned, and the b/d can not produce any records showing prior notice to the rep that it asked for a resignation (emails, faxes, hard-drive time signatures, etc.), that may tip the scales in the rep's favor.

    Also, under the terms of an employment agreement, he might be required to give prior written notice of a resignation or be deemed in breach. If this is the situation, be careful about quitting “effective immediately” or within any improperly short timeframe. Moreover, under some circumstances, it may be more appropriate not to “resign” but to confirm that you have been “constructively terminated.”

  2. Bite your tongue

    For some, the circumstances that led to quitting a firm might seem to call for a resignation letter that gives the firm a few choice comments. As attractive as it might seem to spew some venom on the way out the door, it is almost always a bad idea.

    Intemperate words have a way of coming back to haunt a rep, sometimes in the form of a burned bridge, but also as evidence at an arbitration trial or hearing. Given that a rep's credibility often is what sways a decision one way or the other, it behooves a rep to carry himself in a classy, professional manner on the way out the door.

    As a veteran of these battles, I can't tell you how many resignations would have come off without a hitch (saving my clients thousands of dollars in legal fees) if the resignation letter had not included a parting shot against some boss. Sure, the rep who lets loose on the branch manager gets a few minutes of great pleasure regaling former co-workers at the bar on quitting day, but think for a second about the average securities' lawyer's retainer and hourly rate: That could turn into the most expensive round of drinks a rep has ever purchased.

  3. No need to be too nice, either

    Some of you have been raised to always say “please” and “thank you.” That's all well and good for normal human interactions, but a resignation letter does not qualify. In fact, there are serious legal reasons for not filling a goodbye letter with such stock phrases as “thanks for the wonderful opportunity,” “I've enjoyed my stay here” and “it was a pleasure working with you.” Should you subsequently decide to sue your former firm or have to defend against a complaint, you might need to testify as to how terrible conditions really were there. In that light, words like “wonderful,” “enjoyed” and “pleasure” will look awfully awkward on cross-examination. Indeed, as the rep tries to explain how he was just trying to be polite, he could well expect the following question from the firm's lawyer: “Were you lying then, or are you lying now?”

What To Do

This all begs the question: What is the best form of a resignation letter? In my opinion, it's as simple as the example shown above.

No, it's not imperative to use all those methods of delivery described in the sample letter. If using “By Hand,” however, send at least one other copy by one of the other methods noted above for timestamping purposes.

If a rep tenders the resignation personally, bring the original and a copy and politely ask for the recipient to initial, date and note the time on both letters and retain the copy for your records. Hasta la vista, baby.

Writer's BIO: Bill Singer
is a partner with the law firm of Gusrae, Kaplan & Bruno. rrbdlaw.com

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