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What is the process involved in filing arbitration against my broker-dealer employer?

Milwaukee, WI |

I Left Smith Barney in 2007 to take employment with UBS. I was given an up-front bonus in the form of a forgiveable loan over 9 years. In my employment agreement I agree to settle all disputes by means of arbitration.
I have pages of examples of specific ways in which I feel my firm breached their contract with me and summarily destroyed my business. My assets are completely depleted and I am left with an unforgivin $280,000 loan. Where do I start in an arbitration case to recover losses, future losses due to client exodus and potential loan collection attempts? Is there any way to challenge the arbitration clause? I reside in Wisconsin.

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Attorney answers 3


I presume you signed a pre-employment contract specifying that you had to arbitrate any employment disputes. That contract should specify, first, the location in which the arbitration must be brought. If, hypothetically, the company is based in Colorado, usually the contract specifies that you would have to hold the arbitration hearing in Colorado. You should look for that first.

Second, there are actually different arbitration services available to hire an arbitrator. The one I come across the most is the AAA (American Arbitration Association).

BUT, you should be aware before you do any of this, that arbitrators are usually pro-company, meaning that you essentially start at a disadvantage, based on historical results. Also, arbitrators are expensive and you will likely have to incur some, if not all, of the arbitrators costs. Add to that the potential cost of traveling elsewhere to attend the arbitration and you could be looking at quite the price tag. Moral of the story is that you must be very sure that you do actually want to incur the expenses and face the risks before you request arbitration.

This answer was provided for general informational purposes only, and should not be construed or interpreted as providing legal advice or as creating an attorney-client relationship.


In the brokerage industry virtually all arbitrations are handled by FINRA. To begin a claim against a firm, you can go to the FINRA website and get the info. I STRONGLY recommend you hire an experiencd securities employment attorney since these promissory note cases are extremely difficult to defend (from the rep's point of view). I'm not saying it's impossible IF you have the right set of facts. But statistically speaking reps tend to lose promissory note cases in the vast majority of instances. FINRA will set the hearing in the location closest to where you were employed. To begin the process, you file a Statement of Claim and sign a Submission Agreement and pay a filing fee (varies depending on the amount of the claim but should be around $1,200). If you have some financial hardship, FINRA may waive the filing fee but you'd need to ask for a waiver and provide evidence of financial hardship (i.e., bank statements, list of expenses and income). I repeat: FIND AN ATTORNEY WHO SPECIALIZES IN THIS FIELD. Do a Google search for "securities attorneys employment disputes".


Unless the matter is an employment discrimination matter (see FINRA Rule 13201), all disputes between members (included associated persons, i.e. representatives) are handled by FINRA arbitration, whether or not an arbitration clause exists in the representation contract (see FINRA Rule 13200).

The location will generally be set by FINRA Dispute Resolution taking into account who filed the claim (preference generally is to the respondent - the person that is answering the claim), the arbitration agreement (the venue selection clause in the agreement, if there is one - most likely UBS will select their headquarters location) and the location of essential witnesses (see FINRA Rule 13213). If the agreement provides for a specific location, then the agreement will generally control.

Alan Foxman is correct. Promissory notes cases are an uphill battle. However, FINRA panels may look to equity as well as law in providing awards in arbitration, which may take into account actions or lack thereof of your former firm.

As stated, it is an uphill battle, another option is to try to hire a securities attorney to try to negotiate a favorable settlement with your former firm to reduce the amount outstanding on the loan. Firms may be willing to settle for partial payment for finality (for both you and the firm) rather than a drawn out arbitration that may risk no payment or further reduced payment. However you proceed, I would suggest hiring a securities attorney as well and soon - the firm may institute an arbitration claim against you.

This answer was provided for general informational purposes only, and should not be construed or interpreted as providing legal advice or as creating an attorney-client relationship.