Will they come after me?

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Apr 21, 2009 9:55 pm

I work for a B/D that has changed significantly from the company I built my business at several years ago.  I'm entertaining an offer from a small boutique shop that suits my business more than where I am now.  I purchased a book from a retiring broker a couple years ago when I was trying to get over the hump.  It now represents half of my assets and maybe a third of my production.  The problem is that I foolishly financed the transaction through the firm because of lack of funds at the time.  The catch is that the agreement contains a non-compete for 5 years from the day I leave the firm for those clients.  I have some great clients that I (and my prospective firm) want to take with me.  I still have a manageable balance on the note that I plan to pay off before I exit.  Does anyone have any experience on whether a firm would bother enforcing this if there is no money owed?  I'm trying to decide if I'm unhappy enough to take the risk.... 

Apr 25, 2009 2:40 pm

Thanks for the response Bill.  I've been lurking in these forums for quite some time so please know that your presence is very valuable.  I did in fact mistype that sentence, it is a non-solicit on that portion of my book, sorry.  I am hoping to meet with an industry lawyer this week and as of now have only heard opinions from attorney friends who don't focus on securities.  I have heard all angles with most telling me not to pay the book buyout prior to leaving as I may lose some leverage if (when) they come after me.  Its hard to tell if I will be picking a fight by doing that. 

 
I also didn't mention that there's a retention involved, albeit small, which I am planning on paying once an invoice is received from them.  That language is relatively clear - pay this and you're free -  I'm just not liquid enough to pay prior to exiting.  Am trying to reach out to others that have left to see how they timed the payback and exit.  Have heard my current firm has definitely wanted that money back.  Also heard some paid a deposit with their resignation letter and stated their intention on paying in full.
 
At the end of the day this move appears to be best for my clients, my family & myself and in reality I will be calling them all once at my new firm.  Any advice on how to best execute my exit and payback would be much appreciated from you and anyone else.  I'm not the guy who acts first and asks questions later as you can probably tell.
 
Thanks....
May 11, 2009 4:45 pm

here's an idea: take the upfront money from new firm and payoff old firm