Broker Fights $142,000 Bonus Repayment

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Feb 10, 2010 8:01 am

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An irreverent Wall Street Blog
by Bill Singer
http://www.brokeandbroker.com/index.php?a=blog&id=309
 
Former Broker Avoids Full Repayment of $142,000 Bonus
Written: February 9, 2010 

In a Statement of Claim filed in a FINRA intra-industry arbitration proceeding on or about November 10, 2008, In the Matter of the Arbitration Between Citigroup Global Markets, Inc. (successor to Legg Mason Wood Walker) and Lloyd Laughlin et. al (FINRA 08-04169, February 8, 2009), Claimant Citigroup asserted breach of employment contract arising from Respondent Laughlin's termination on February 8, 2008, and his alleged failure to repay five Financial Advisor Bonus Repayment Agreements ("Agreements") entered into between Claimant and Respondent. Claimant alleged that under the Agreements all unpaid balances (some $142,000) became immediately due and owing to it upon Respondent's termination (for any reason whatsoever), and that under the Agreements, if Respondent's employment terminated for any reason whatsoever, the entire amount of the unpaid balance was immediately due.


It's hard to pick a winner in this case.  Sure, the Panel technically ruled in Citigroup's favor but sometimes it's how much you are awarded that determines if you are truly the victor.  Read Bill Singer's comprehensive case analysis at:


http://www.brokeandbroker.com/index..php?a=blog&id=309

Feb 10, 2010 11:30 pm

Hi Bill,

 
It is my understanding that Legg Mason taxed their up-front payments to the advisors they recruited entirely on day one........unlike all the other firms which taxes a portion of it annually, as it is forgiven. 
 
All contracts are similar to the wirehouses with a time frame (5 years, 8 years, etc...) that needs to be completed, or else money is due back.
 
Was this the case with Laughlin?
 
Whether it is or isn't, how much of a big deal is it in fighting Citi (who took over for Legg) in this type of case?
 
Thanks in advance.......