Old firm demanding commisions back?

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Aug 6, 2006 11:12 am

as an FA who resigned from one wirehouse to work for another, can the old firm sue to get commisions/fees that were already paid ?xample: managed account fees paid in advance, while at the same time keepin other fees that were owed to me?


do they have any legal recourse (their atty said they will be filing with the NASD?)  does this sound right?   i also live in CA (very employee friendly.)


Thanks in advance for any help.


Aug 6, 2006 11:38 am

Why don't you capitalize the first letter of a sentence, and at least glance through what you're about to post where people can read it.


You never get a second chance to make a first impression.


As for your question--in the United States anybody can sue anybody for anything at all.


Will they prevail?  Who knows, but certainly they can sue you, and certainly they can withhold compensation if they feel that they have a legitimate right to recoup what has already been advanced to you.


What does your new firm's legal department advise you to do?

Aug 6, 2006 11:41 am

Has your previous employer released your licenses--or are you working at your new firm on the assumption that your licenses will transfer?


There have been a lot of guys and gals who resign from Firm A to join Firm B only to find out that Firm A will not release their license, nor will they rehire.


"Sir, do you know I used to be a stockbroker?  May I recommend a tie to go with your new suit?"

Aug 6, 2006 7:09 pm

yes they released liceneses 3 months ago when i moved.  new dealt with TRO issues already for me, etc.  regarding this, they said i'm 'on my own.



my intent is to tell them to pound sand.  my only concern is the comment from their attorney about filing something with the nasd?  just not sure if/what they could do?



thanks again in advance.


Aug 6, 2006 7:46 pm

Why do they want you to repay them?

Aug 6, 2006 8:04 pm

they said they were quareterly managed fees that were paid in advance for the following 3 months.  i left 1.5 months into it.  i've asked people at other wirehouses in this situation and nobody else has had this demand put on them from the old firm?



i did have a nasty move.  could the old firm just be doing this out of spite?  any nasd issues?

Aug 6, 2006 9:19 pm

I wrote a check for unearned fees at the time I left.  It makes sense that if you left with advance fees in your pocket, and someone else serviced the account for the remainder of the fee period, you owe it.  I asked an attorney before I wrote the check and you should also.

Aug 6, 2006 10:42 pm

If you didn't earn it why do you feel you are entitled to it? If you were mistakenly paid 10,000 more than usual do you think just because you quit you wouldn't be responsible for paying it back.



My advice pay it back and get something written saying your U4 will be kept clean. If not get a lawyer, better be a good one.

Aug 7, 2006 9:11 am

Just pay them.  The peace of mind will be worth it.


Do you really want to spend time worrying about this or fighting it?


Spend time prospecting for your new business.

Aug 11, 2006 11:20 pm

Maybe I'm missing something here, but where are the customers' yachts?


In other words, who is looking out for the clients' interests? Did the firm refund the "unused" portion of the fees? Or did they actually compensate the new advisor to take over the accounts?


Did you get the accounts ACATed immediately? If so did you charge them for the partial fee? If you have to pay something back to the former broker and they didn't compensate the replacement manager, it seems they should be refunding the unused fee to the client. Then you could charge the client for the partial quarter and be paid on your new firm's grid.


The key thing here should be protecting the best interest of the client.

Aug 14, 2006 12:37 am

OD, I can't speak for the firm in question as I'm confident that it's not one I'm familiar with. I can tell you that LPL refunds advance fees prorated to the day that the account closes/transfers.  Since reps are only paid monthly in advance (vs. quarterly), there's usually little to get charged back...just a partial month.


Hopefully most firms are ethical enough to refund unearned fees, assuming the relationship is terminated.

Aug 17, 2006 2:48 pm

When I left the wirehouse their attorney sent me a letter asking me to return some fees paid to me in advance.  However when I talked to my attorney, he told me to keep taking accounts and not to worry about it. I never heard from them again. That was just my experience. 

Aug 17, 2006 2:59 pm
downtown:

When I left the wirehouse their attorney sent me a letter asking me to return some fees paid to me in advance.  However when I talked to my attorney, he told me to keep taking accounts and not to worry about it. I never heard from them again. That was just my experience. 


Ah somebody trying to win me over by saying that they too are not afraid to ignore lawyer letters.


If you're really agressive get a rubber stamp that spells out F U, stamp it on the letter and send it back postage due.

Aug 17, 2006 3:29 pm
davidf:

just not sure if/what they could do?



We really don't have enough of the big picture here to be sure.  There have been a lot of good comments here, but do you really want to rely on an anonymous web forum for this kind of legal advice?

I suggest you bring this matter to an attorney.  If you don't have a relationship with a good law firm, then it's time to develop one.  (Be sure to pick one who is well connected and understands the industry.  They can be great referral sources).

I'm not saying that everybody should always contact an attorney about every decision.  It just sounds as though the complexity of this situation exceeds your current comfort level.  That's a good time to bring in an expert.  (You could say the same thing about the investor/FA relationship).




Aug 20, 2006 4:54 am

i'm being advised that in Nor CA (very liberal) to ignore it.  on the basis the old firm would wast too much $$ and time going to arbitration over it.  in addtition, being in CA it is way to hard to have an employee pay back $$ that has hit their account already.


liberal attorney thoughts?

Aug 20, 2006 7:57 am
davidf:

i'm being advised that in Nor CA (very liberal) to ignore it.  on the basis the old firm would wast too much $$ and time going to arbitration over it.  in addtition, being in CA it is way to hard to have an employee pay back $$ that has hit their account already.


liberal attorney thoughts?



Sentences begin with capital letters.


The words "Two," "To," and "Too" are not the same and are used to convey different meanings.


How is it possible that somebody with so little knowledge of the English language could pass NASD exams.  They are way too easy.

Aug 20, 2006 8:10 am

How much do they think you owe them?

Aug 22, 2006 7:23 pm

alot.  like 4 or 500 hundred. 

Aug 23, 2006 9:41 am
davidf:

alot.  like 4 or 500 hundred. 



You must be kidding.  Now we are the idiots for taking time out of our day to respond.  That is a pittance and you are a pity.

Aug 23, 2006 9:50 am
davidf:

alot.  like 4 or 500 hundred. 



So...you owe them either $4 or you owe them $50,000? Pay them their money and get on down the road.