This FAIQ article reports that a former Merrill Lynch advisor, Howard Rowen, has been ordered to repay over $1.5 million in promissory notes issued as a hiring bonus when he joined the firm in 2014. Rowen, a 31-year industry veteran, left Merrill for JPMorgan Advisors in September. In January, Merrill initiated a claim with the Financial Industry Regulatory Authority (FINRA) seeking recovery of the note balance, interest, and attorneys' fees and costs. The FINRA arbitrator awarded the full amount due, interest at 2% per annum, and a total of $9,578 in attorneys' fees and costs. Rowen was not represented by counsel, did not file a response to Merrill's claim, and did not appear for the arbitration.
This case serves as another example of why brokers and advisors transitioning between firms should seek specialized legal counsel. By doing so, they can avoid potential legal issues, protect their financial interests, and ensure a smooth transition between employers. Legal counsel can be considered a form of inexpensive business insurance, providing peace of mind and reducing the risk of costly litigation or arbitration.
Legal counsel can play a crucial role in helping brokers and advisors navigate transitions between firms and negotiate favorable terms with their former employers. By leveraging our expertise and knowledge of industry regulations and contracts, Abell Law can facilitate a smoother transition and minimize potential financial and legal risks. Some of the ways we can assist brokers and advisors include:
Negotiating favorable terms: We work with the former firm to negotiate terms that are more favorable to you, such as modifying non-compete or non-solicitation agreements, or adjusting the repayment terms of promissory notes.
Raising possible counterclaims: We can assess and discuss potential counterclaims with your former firm. This may help you either defend your position or reach a more favorable settlement.
Formulating payment programs: We regularly work with the former firm to develop a payment program that allows our clients to repay outstanding debts in a manageable way (avoiding potential bankruptcy). This often includes negotiating a reduced principal amount, an extended repayment period, or a combination of both.
Reducing interest charges and legal costs: By engaging in good faith negotiations with your former firm, we can help avoid or reduce interest charges on outstanding debts and minimize legal costs associated with the acceleration of your note. Remember - borrowers typically agree to pay all legal and other collection costs. These can accumulate and be more than your note.
Avoiding other damages: We can help brokers and advisors understand the potential consequences of their actions, and advise them on how to avoid actions that could result in punitive damages being assessed by arbitration panels. This might include ensuring compliance with industry regulations, contractual obligations, and any relevant agreements with the former firm.
Hiring specialized legal counsel during a transition between firms can provide brokers and advisors with invaluable guidance, protect their interests, and help them avoid costly litigation or arbitration. Engaging legal counsel is a proactive measure that can save time, money, and stress in the long run.
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