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Broker Protocol Cited In Bonus Retention Lawsuit
April 13, 2016The preamble to the "Broker Protocol" states the following:
The principal goal for the following protocol is to further the clients' interests of privacy and freedom of choice in connection with the movement of their Registered Representative ("RRs") between firms. If departing RRs and their new firm follow this protocol, neither the departing RR nor the firm that he or she joins would have any monetary or other liability to the firm that the RR left by reason of the RR taking the information identified below or the solicitation of the clients serviced by the RR at his or her prior firm, provided, however, that this protocol does not bar or otherwise affect the ability of the prior firm to bring an action against the new firm for "raiding." The signatories to this protocol agree to implement and adhere to it in good faith.
READ the FULL-TEXT "Broker Protocol"
As with many efforts
to reach any industry-wide consensus, the Broker Protocol often
succeeds but also has its moments of failure. Similarly, while the goals of the
member firm signatories are often met by the terms of the Protocol, the
desires of the hundreds of thousands of subject men and women registered reps
are not always satisfied. Pointedly, many chafe at the upfront admonition that
the Protocol was designed to best serve clients privacy
rights and freedom of choice. Critics would argue that the Protocol
is merely another arrow in the quiver of management to be used against
disgruntled labor. In essence, the bosses dictate the terms by which the
employees can come and go. Whatever your allegiance and preferences, consider
how the Protocol came into play in a recent industry
arbitration.
Case In
Point
In a Financial Industry
Regulatory Authority ("FINRA") Arbitration Statement of Claim filed
in November 2014, former Ameriprise Financial Services, Inc. employee
Claimant Chapman asserted unfair trade practices and breach of the Broker
Protocol. Claimant alleges that he was paid a bonus by Ameriprise Financial Services, Inc. but his
former employer demanded repayment because he had allegedly violated the
non-compete provision of the agreement under which the bonus was paid. Claimant
apparently argued that he should not be required to repay the bonus because he
departed from one Broker Protocol signatory to another, and
he apparently asserted that he did so in compliance with the Protocol.
Claimant sought unspecified damages, fees, and costs. In the Matter of
the FINRA Arbitration Between John W. Chapman, Claimants,
vs. Ameriprise Financial Services, Inc. and Ameriprise Financial, Inc., Respondent
(FINRA Arbitration 14-0337114-03371, March 10,
2016).
Respondent Ameriprise Financial
Services, Inc. generally denied the allegations and asserted various affirmative
defenses.
Respondent Ameriprise Financial, Inc. did
not submit a Statement of Answer or
Submission
Agreement. In March 2015, FINRA notified
Claimant that Ameriprise Financial, Inc., a non-member, did not submit to FINRA
jurisdiction. Accordingly, the Panel did not adjudicate any claims against Respondent Ameriprise Financial, Inc.
Award
The FINRA Arbitration Panel
found Ameriprise Financial Services, Inc. liable to and ordered it to pay Claimant
Chapman:
- $117,666.45 in compensatory damages;
- $5,833.25 in attorneys' fees; and
- $250.00 in costs
Bill Singer's
Comment
This FINRA Arbitration Decision titillates
us with references to Claimant's use of the Broker Protocol as
a defense for his right to retain a bonus, but the arbitrators never tell us
what the actual facts in dispute were. About all we know is that there was an
issue between Claimant and Ameriprise over something involving non-competition.
Further, although this case sets up as one in which Claimant was looking to
retain a paid bonus, we wind up with an award of just under $125,000 -- for
what? Your guess is as good as mind.