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Stifel Claws Back More than $400,000 amidst FINRA Arbitration

Thursday, August, 25, 2016

The company of Stifel, Nocolaus& Co. is clawing back $440,000 from an advisor discharged from the company nearly two years ago. It is the latest brokerage firm to recoup compensation that were tied to promissory notes, according to the Financial Industry Regulatory Authority Inc. (FINRA).


According to details from the FINRA dispute resolution document, Christian Harkness will pay the company the balance owed on a promissory noted signed in 2008 when he joined the company. Brokers are frequently given large sums of cash upfront when they are hired and they sign promissory notes requiring them to return a portion of the money if they leave the company prior to their multi-year contract.


Disputes concerning these promissory notes are common FINRA arbitration cases because brokers attempt to hold onto the cash they received when signing on, especially if they reach certain performance targets. Most lose and find themselves having to pay hundreds of thousands of dollars back to their former employer’s, as well as the attorney’s fees of the firm. These disputes are contractual in nature and firms make sure they are able to fight back and win.


Recently, an arbitration panel awarded Wells Fargo nearly $1 million that had to be paid by a former broker. Morgan Stanley “clawed back” more than $300,000 from an advisor around the same time.


Stifel will receive more than $900,000 from broker in damages because he breached the promissory note from 2008. The arbitration panel also decided the broker must pay the $300,000 due in attorney’s fees.