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I’m looking for a little help out there in regards to forgivable notes. What is the legal process a firm goes trough to get back money paid in a note, if you leave before the time period is up? If you come over on a back end recruiting deal, hit your numbers, recieve a note, and then leave before it’s forgiven, what happens to you legally? How about in a situation where the Firm completely changes it’s model on you similar to that of the BAC model going to Merrill’s? Do you have any legal right to the bonus money if the firm signed you up for one thing and then completely changes on you? Or just screwed? All help and comments apprecitated?
Any legal advice you receive here is free, and worth every penny you pay.
If you really want to know how your note would likely be handled by your B/D, and the risks you would face if you leave during the term of the agreement, you need to hire legal counsel.
Others may well pitch in with their own experiences, but of course the only thing that really matters is what your likely experience will be given your circumstances, and no one here can help much with that.
Good luck, humdinger. And great choice of user name!
I second the above, but will throw in a few "I think…“s:
I think you can plan on being held liable if you leave for the un"vested” portion of the notes. And they typically are not a "bonus, they are–as the title of your thread says–Forgivable Notes. The language usually says they can do whatever they want to you and you have to take it.
However, I think it is not unusual for firms to settle for less (sometimes much less) than the amount still owed on the note. The lawyers go back and forth and tend to settle just before the firm takes you to arbitration.
But yeah, get someone who knows what they are talking about–that is, an attorney who does this kind of thing.