New Jersey Lawyer & Attorney : Stark & Stark Law Firm : New Jersey Law Blog

Thomas B. Lewis, Chair of Stark & Stark's Employment Group, was quoted in the February 26, 2010 Registered Rep article, Some Predict Broker Protocol Overhaul. The article addresses the possibility of an overhaul to the Protocol for Broker Recruiting in the wake of increased lawsuits and constant movement of advisors as they switch firms. When the protocol was first created, it was an exclusive pact between three wirehouse firms put in place to prevent expensive litigation every time an advisor switches firms. Today, there are approximately 420 signatories to the agreement, and recently, some firms are adding letters to clarify their participation in the protocol.

Mr. Lewis states that it could become very unruly if each company began including its own letters and sets its own rules as to compliance or noncompliance with the protocol. Mr. Lewis believes that the protocol will become ineffective at that point, and something has to be done as to the clarification letters because there is no telling where it may stop.

You can read the full article online here. (PDF)

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Thomas B. Lewis, Chair of Stark & Stark's Employment Group, was quoted in the February 24, 2010 FinancialPlanning.com article, The Recruiting Wars Turn Nasty. The article discusses the Protocol for Broker Recruiting and the recent decrease in firms suing each other over poached advisors. The article goes on to discuss some of the recent more highly publicized cases which have advisors, and their attorneys, questioning whether or not the days of increased claims and counterclaims are about to return.

Mr. Lewis discusses the fact that both Goldman Sachs and Credit Suisse have not signed on to the protocol, and Mr. Lewis states that Goldman Sachs in particular takes the attitude that the clients belong to the firm, not the advisor, and therefore should not move if an advisor defects.

You can read the full article here. (PDF)

 

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Thomas B. Lewis, Chair of Stark & Stark's Employment Group, was quoted in the February 19, 2010 On Wall Street article, Goldman Drops Case Against Former Advisors. The article discusses Goldman Sachs' recent decision to drop their case against five former financial advisors and two support staff members (David Greene, Craig Savage, Andrew Thompson, Sharran Srivatsaa, John Pitt, Stephanie Dennard and Kim Tyson). The suit accused the advisors of breaching their non-solicitation agreements by moving to rival firm, Credit Suisse, and attempted to take their clients with them.

Mr. Lewis states that these types of cases are typically settled quickly and the firm who poached the advisors will often agree to pay a portion of the revenue generated by any of the accounts that the advisors’ transferred over for a period of 12 months to their prior firm.

You can read the full article online here.

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Stark & Stark Employment Group Chair, Thomas B. Lewis, was quoted in the January 20, 2010 RIABiz.com article, Broker protocol may be endangered by complexities as membership starts to explode.

Although recently, a large number of firms have joined the Protocol for Broker Recruiting, three big companies have put limits on the extent to which the no-fault poaching truce applies to them. Though the restrictions have so far been fairly minimal, the number of signatories and the addendum letters by Merrill Lynch, LPL and Ameriprise are raising questions in some lawyers’ minds about whether the Protocol may eventually become difficult to use.

Mr. Lewis states, “You have such an explosion of members, it’s become unwieldy. What’s happening now is that there are certain companies that are trying to limit their exposure under the Protocol, which makes it even more unwieldy.”

You can read the full article here. (PDF)

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Thomas B. Lewis, Shareholder and Chair of Stark & Stark's Employment Group, was quoted in the January 14, 2010 RegisteredRep.com article, Citi Files Motion To Dismiss In Bonus Pay Class Action. The article discusses Citigroup's recent decision to file a motion to dismiss a class action lawsuit filed against the firm over the terms of its financial advisor bonus pay agreements. The motion was filed with the U.S. District Court for the Southern District of New York this past Monday, January 11, 2010.

Mr. Lewis states that there is a good chance that the court will dismiss the complaint, and goes on to say, “realistically it’s an issue that’s subject to FINRA’s jurisdiction. The plaintiffs tried to get out of the FINRA arbitration by getting class action status for the case. But courts are reluctant to get involved if there is FINRA jurisdiction.”

You can read the full article online here. (PDF)

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“GINA” (the “Genetic Information Non-Discrimination Act”) was signed into law on May 21, 2008 by President George Bush.  It became effective a few days ago on November 21, 2009, at least with regard to its employment provisions (its health insurance provisions have been in place since May 21, 2009). 

Employers need to know that GINA prohibits them from requiring genetic test information from job applicants.  More importantly, and less obviously, the Act prohibits potential employers from seeking out and gathering information – even information in the public domain such as on the Internet - regarding job applicants.  While inadvertent acquisition of genetic information regarding a job applicant is not a violation of the Act, employers do not want to get into a situation where they need to explain why they have gathered genetic/medical information about their employees. 

The information about the employee’s close relatives can also be violative of GINA if that information is acquired for the purpose of learning about genetic health-related problems or conditions.  A quick Google search of a potential employee’s name can sometimes produce such information, whether be in the form of a Facebook entry, an obituary, or other seemingly benign sources.  The EEOC, the Department of Health and Human Services, the Department of Labor, the Department of Treasury, and similar state agencies will all have a hand in enforcing GINA.  Like HIPPA, GINA is easy to violate if an employer is unaware of its requirements.  Employers should seek guidance in updating their internal employment procedures and policies to avoid an expensive GINA violation.

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Stark & Stark Employment Group Chair, Thomas B. Lewis, was quoted in the November 17, 2009 RIABiz.com article, RIAs drive explosive growth of the Broker Protocol. The article discusses the recent rise in firms who have signed the Protocol for Broker Recruiting and what this truce will mean for changes in wirehouses across the country. Mr. Lewis states that he expects the growth in the number of firms signing the Protocol to continue, and states that as more sign on, there’s even more incentive to join.

You can read the full article online here.

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Stark & Stark Employment Group Chair, Thomas B. Lewis, authored the article, It's Payback Time on Promissory Notes, for the November 2009 edition of On Wall Street Magazine. The article discusses the recent trend in unhappy advisors seeking new firms in the wake of a down market and their old firm's enforcement of collecting promissory notes.

Mr. Lewis states a common misconception that advisors believe their firms will accept 50% repayment of a promissory note, when in reality, this is not the case. Mr. Lewis goes on to discuss the new procedures put in place by the Financial Industry Regulatory Authority (FINRA), the possible defenses advisors could use in promissory note arbitration, and a discussion on how the Protocol for Broker Recruiting will impact the future of promissory note collection.

You can read the full article online here.
 

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Stark & Stark Employment Group Chair, Thomas B. Lewis, was quoted in the October 19, 2009 Wall Street Journal article, COMPLIANCE WATCH: Expulsion Shows Risks Of Outside Accounts.

The article discusses the recent expulsion of Miguel A. Chavez by the Financial Industry Regulatory Authority (FINRA). The expulsion comes as a result of Chavez's association with firms that sell securities after he opened an outisde account and did not inform his employer of the account. Mr. Lewis states that brokers who are contemplating a job change may want to move their assets to another brokerage if they anticipate a dispute about money owed for a signing or retention bonus, which are typically secured by promissory notes.

You can read the full article oline here. (PDF)

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Stark & Stark Employment Group Chair, Thomas B. Lewis, and Stark & Stark Securities Group Shareholder, Bill Singer, were quoted in the September 29, 2009 RegisteredRep.com article, Can You Take It With You?

The article discusses a recent class action lawsuit led by Mark Thierman which seeks to change the current practice of brokerage firm's demanding advisors pay back the full balance of promissory notes after they have left the firm. The suit was filed the same day a FINRA arbitration panel ordered Thomas Banus to repay Smith Barney roughly $39,000, the balance plus interest on the loan Banus received when he joined Smith Barney two years earlier.

The suit argues that Citigroup did not fulfill it's obligations to Banus, or the other members of the class action, and the mismanagement of the firm forced the advisors to seek employment elsewhere.

If Thierman is successful in proving that Citigroup breached that duty, due to the similarity of  employment contracts used at brokerage firms, this suit could have a major impact on large firms throughout the country. However, Mr. Singer states, "At the end of the day the defense will say, 'A contract is a contract. You knew what you were getting into when you signed the deal. Now, own up to it."

You can read the full article online here. (PDF)

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