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Non Comp/Non Solicit with a Troubled Bank

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Jun 17, 2011 7:58 pm

I am curious if anyone knows at what point a contract may become unenforcable.  I am considering going indy and would like to take my client base with me.  The bank that I am with has had several issues in the past few years including: a cease and desist order by fdic, several years of losing money, significant employee turnover.  I feel as though I should not have to go down with the ship.  The advisors that would still be here pretty much only do fixed annuities and I don't know if they would even be able to manage the accounts that I leave behind since I do primarily fee based brokerage and mutual funds.  I plan on having an attorney review my non compete/non solicit agreement, but figured I would see if anyone here may have any insight.   Also would any indy b/d like lpl or rj be willing to look at my contract and advise?


Jun 24, 2011 2:07 pm

I agree that you should have an attorney review your agreement.  In my prior life as a CCO for an indy firm I know that the firm may comment on whether or not your contract is enforceable or not but keep in mind they don't represent you, in a legal capacity, and they won't indemnify you, in fact, they will have you indemnify them should the bank sue you and the new firm for breach and tortious interference.  My prior firm would have also made a determination of the likelihood of a suit and if so, pass on the recruit.  There's also an economic/business consideration, are you a TTM $100k producer or a $1MM producer?  If the latter a firm might consider the risk if they feel they had a good chance of converting over the ongoing production.

good luck.