FINRA Addresses Smart Phone Use by Brokers

Posted on August 30, 2011 by Rob Radcliff

FINRA recently followed up its issuance of Notice 10–06 on social media use with Notice 11-39 that takes on smart phone use by registered advisors. 

The regulations, which are approximately eight pages in length, provide some overall policies and then Q and A information. Advisor One provides a very detailed analysis of the regulations, including the distinction between unscripted “interactions” via a personal device and static postings.

One of the more illuminating questions deals with whether firms may allow representatives to use personal communication devices to perform business activities. The answer is yes.  But: 

the firm must be able to retrieve and supervise business communications regardless of whether they are conducted from a device owned by the firm or by the associated person.

In order to ensure that the business communications are readily retrievable without necessitating the capture of personnel communications made on the same device, firms should have the ability to separate business and personal communications, such as by requiring the associated persons use a separately identifiable application on the device for the business communications. 

FINRA is big on record keeping as illustrated above.   How the advisor and their employer will segregate personal communications from business communications remains to be seen.  Imagine having to constantly filter your business communications from your personal communications on email/twitter/facebook etc.  That is not an easy proposition. 

As we have discussed, many of the larger wirehouses are slowly rolling out social media programs for their advisors.  The archiving and control of business communications will be a challenge as they attempt to harness the flexibility of social media with the rigidness of the FINRA guidelines. 

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Want to be on the Real World? Think twice.

Posted on August 24, 2011 by Rob Radcliff

                                              

I’m embarrassed to admit to watching “The Real World” when it first came out in the early 90’s. It’s been many years since I have tuned in, but I always wondered what the contract was like that cast members had to sign. Luckily, the Village Voice has obtained the agreement. 

 

Some highlights:

 

I acknowledge and understand that, as for the participating in other hazardous activities, my participation in the Program carries with it the potential for death, serious physical injury, extreme emotional distress, mental or physical illness and property loss.  

 

I understand and acknowledge that Producer may or may not screen or conduct background checks or investigations of the other participants or any other person who appears, or may appear, on the Program (including an investigation of any person’s medical, professional or criminal history) and Producer has no duty to conduct such an investigation.

The Producer is not responsible if any of the cast members obtain a sexually transmitted disease. 

And my favorite: 

 

I further understand that my appearance, depiction, and sexual portrayal in an in connection with the Program (including without limitation, the title of the Program), in my actions and the actions of other displayed in and in connection with the Program, may be disparaging, defamatory, embarrassing or of an otherwise unfavorable nature, may expose me to public ridicule, humiliation or condemnation and may portray me in a false light.

So, I get to live with persons who have had no background check and may be disease-ridden and the producers of the Program can portray me in any manner that they see fit, whether or not it is accurate or even true. Where do I sign up? Certainly not your typical employment contract.

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Top Law Blogs

Posted on August 22, 2011 by Rob Radcliff

                                                   

This blog has been nominated by LexisNexis as a top 25 Labor and Employment Law Blog for 2011.  If you like the blog, please consider voting for it - details below:

 

Each comment is counted as a vote toward the supported blog. To submit a comment, visitors need to log on to their free LexisNexis Communities account. If you haven’t previously registered, you can do so on the Labor and Employment Law Community for free. The comment box is at the very bottom of the blog nomination page. The comment period for nominations ends on September 12, 2011. We will then post the Top 25 Labor and Employment Law Blogs of 2011. Thereafter, our community will vote to choose the Top Blog through a Zoomerang survey. I anticipate the final announcement to be made at the end of September.

Also, please consider my co-authors on the Think Before You Click book.

Thank you for consideration and continued reading.

Rob

 

 

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Financial Advisors - Look Before You Leap

Posted on August 15, 2011 by Rob Radcliff

 

According to a recent survey, brokers and wealth managers will be on the move during the remainder of 2011 and in 2012. The survey,  entitled “Wealth Management on the Move: The Moment of Truth” notes that there was a significant "buying" of advisors and wealth managers in 2008 and 2009 through retention packages.  These usually took the form of forgivable loans with 3 - 4 year retention periods.  This means  the loans are now forgiven or close to it. 

 

As a result, a lot of brokers are weighing new offers from new firms that include large signing bonuses: 

 

A lot of top brokers will look at the signing bonus being offered, and at how little is left on the retention contract, and they’ll decide it looks like jumping ship is a good deal

 

Brokers need to be sensitive to the risk/reward calculus involved in any employment move.  Things to consider include:  

 

  1. The effect of any non-compete or non-solicitation agreement may have on their move to a new employer;
  2. The effect of any “garden leave policy” may have on their transition;
  3. Whether their new employer is in a position to aggressively help them move their business;
  4. The tax implication any bonus or promissory note may have on them individually;
  5. How much business might be lost; and
  6. The general hassles of moving to a new employer.

The grass is always greener on the other side of the fence.  Any employee should critically evaluate the pro's and con's of a move and consult with counsel if necessary.

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Don't Ignore a TRO

Posted on August 12, 2011 by Rob Radcliff

 

 

                         

 

In Texas a party seeking a temporary restraining order can do so ex parte - without the presence of the other side. In Dallas, most cases require that Plaintiff seeking the TRO provide the other side with the actual pleadings and a proposed Temporary Restraining Order two hours before any hearing.

 

When the notice for a TRO appears, do not ignore it. Call the company’s lawyer immediately, because once a TRO is entered, it sets the tone for the lawsuit and is difficult to undo. 

 

TROs are frequently used in non-compete cases. If the party ignores the notice of the TRO, it is essentially allowing the party seeking the TRO to have an unencumbered conversation with the Court where there is no defensive argument. Depending up on the Judge, there is a high likelihood by simply meeting the elements of the TRO, they will get the relief they are requesting. This could result in the shutdown of the business and end up costing the Defendant a substantial amount of money. The problem is, if the TRO is entered, the Defendant will either have to move to dissolve the TRO (which is costly) or appear for an injunction hearing in two weeks and have a mini-trial, also costly. 

 

More importantly, the Plaintiff has been permitted to set the tone for the lawsuit and can tell the Judge all the bad things the Defendant has done whether or not they are actually true. An application for a TRO must be treated seriously and addressed. It is very difficult to rewind the clock on the TRO process.

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Recruiters Beware

Posted on August 8, 2011 by Rob Radcliff
 

A recent case filed in Dallas provides some guidance for recruiters, especially when they recruit lawyers. Lawyer Chris Gilbert sued recruiter Diane Caldwell, the recruiter who convinced him to move from Nashville to Dallas and work for Patton Boggs as a partner. The petition asserts claims for breach of fiduciary duty, fraud, negligence, and breach of contract.

The case is  profiled in  The Texas Lawyer and the crux of the dispute are representations allegedly made by the recruiter where she stated she was independent and working directly for Gilbert, not the law firm.  The lawsuit alleges the recruiter was actually retained by the firm and was neither independent nor representing the interests of Gilbert.

In response, the recruiter filed her answer and asserts there is no fiduciary duty.  We've previously discussed the legal significance of fiduciary duties because it places the burden on the fiduciary or defendant as opposed to other traditional causes of action.

This case illustrates the importance that recruiters be explicit when interacting with job candidates.  Recruiters should avoid representing they are "independent" if they have been retained by the employer and should disclose the existence of this relationship to the prospective employee.  Of course, the recruiter should also always be cognizant of any representations that they make about a potential new employer.  There is a fine line between selling and outright fraud.  We'll continue to monitor this case as it develops.

 

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