Securities Industry Employment Dispute Attorneys – Bakhtiari & Harrison
Employment disputes in the securities industry
Employment disputes in the securities industry are fundamentally different from general employment disputes. The regulatory framework governing registered representatives and investment advisers — FINRA rules, U4 and U5 disclosure obligations, the Protocol for Broker Recruiting, and the specific contractual structures common to the industry — creates a set of legal issues that general employment attorneys are not equipped to handle. Bakhtiari & Harrison represents financial professionals in employment disputes with the specific industry knowledge that these cases require.
David Harrison’s career path — from Series 7-licensed registered representative at Shearson Lehman Brothers, to New York City assistant district attorney, to in-house counsel at Morgan Stanley Dean Witter — gives him a direct understanding of both sides of securities industry employment disputes. He has negotiated and enforced employment agreements on behalf of a major Wall Street firm and now uses that inside knowledge exclusively on behalf of financial professionals.
Employment dispute claim types
Wrongful termination
Financial professionals employed by broker-dealers have rights that protect them from termination for unlawful reasons — even in at-will employment states. Terminations that violate employment agreements, that target members of a protected class, that retaliate against whistleblower activity, or that breach implied contractual obligations may be actionable. The securities industry has specific protections for registered representatives who report regulatory violations — retaliation against whistleblowers is prohibited under both FINRA rules and federal law.
Discrimination and harassment
Financial services is one of the most regulated industries in the United States, yet discrimination and harassment claims remain common. Bakhtiari & Harrison represents financial professionals in claims involving race, sex, age, religion, and disability discrimination, as well as sexual harassment and hostile work environment claims. These claims are pursued through FINRA arbitration where the employment agreement requires it, or in state and federal court where arbitration is not required.
Constructive termination
Constructive termination occurs when an employer creates working conditions so intolerable that a reasonable employee has no choice but to resign. In the securities industry, constructive termination claims frequently involve changes to compensation structure, removal of support staff or resources, reassignment to less favorable roles or territories, or systematic exclusion from client relationships — all designed to force a resignation rather than trigger the firm’s termination obligations.
Retaliation
Federal and state law prohibit retaliation against employees who report securities law violations, file complaints with regulators, or participate in regulatory investigations. FINRA Rule 2010 also prohibits retaliation against registered persons who cooperate with FINRA investigations. Retaliation claims in the securities industry are particularly serious because they frequently result in false or misleading U5 termination disclosures — which compound the harm to the financial professional’s career.
False inducement
Financial professionals who were recruited away from prior positions with promises that were never kept may have false inducement claims. Damages in false inducement cases can include the value of commissions, bonuses, and other benefits given up at the prior firm — projected forward over the period during which they would have been earned — plus direct expenses incurred in connection with the transition. These claims require prompt action: the more time that passes, the harder it is to establish the causal connection between the false promise and the damages.
U5 defamation
When a broker-dealer files a U5 with false or misleading termination disclosures, the financial professional’s CRD record is permanently damaged — affecting employability, client relationships, and regulatory standing. Bakhtiari & Harrison handles U5 defamation claims both through FINRA expungement proceedings and in court. False U5 filings are among the most serious employment-related harms in the securities industry because their effects are immediate, public, and permanent without legal intervention.
The U4 and U5 intersection with employment disputes
Every securities industry employment dispute has a regulatory dimension that general employment attorneys miss. When a financial professional is terminated — for any reason — the firm is required to file a Form U5 within 30 days disclosing the reason for termination. If the firm files a U5 that characterizes the termination as being for cause, or that discloses allegations of misconduct, the financial professional’s BrokerCheck record is immediately affected. This disclosure is visible to the public, to prospective employers, and to regulators.
Bakhtiari & Harrison approaches every securities industry employment dispute with the U5 consequences in mind from day one. Negotiating the language of a U5 — or contesting a false one after the fact through expungement or court action — is frequently as important as the underlying employment claim itself.
FINRA arbitration for employment disputes
Most securities industry employment disputes are resolved through FINRA arbitration rather than court, because most industry employment agreements contain FINRA arbitration clauses. This is true even for employment claims that would ordinarily be litigated in court — discrimination, harassment, and wrongful termination claims are all potentially subject to FINRA arbitration if the employment agreement requires it. Bakhtiari & Harrison represents financial professionals in FINRA arbitration at all of FINRA’s regional hearing locations nationwide.
Compensation disputes — separate page
This page covers the employment relationship — termination, discrimination, harassment, retaliation, and false inducement. For compensation-specific matters — withheld bonuses, deferred compensation, production credit disputes, and promissory note defense — visit the Compensation Disputes page.
Why David Harrison’s background matters for employment disputes
Most employment attorneys who represent financial professionals have never worked in the securities industry. David Harrison has. He began his career as a Series 7-licensed registered representative at Shearson Lehman Brothers — understanding the industry’s employment dynamics from the inside. He spent years as in-house counsel at Morgan Stanley Dean Witter, where he managed the full range of employment issues that arise at a major broker-dealer. He now uses that institutional knowledge exclusively on behalf of financial professionals facing these same issues on the other side.
Frequently asked questions — employment disputes
Can my broker-dealer require me to arbitrate my employment discrimination claim?
Possibly. Employment agreements in the securities industry frequently contain broad FINRA arbitration clauses that may require arbitration of discrimination and harassment claims that would otherwise be litigated in court. The enforceability of these clauses for certain statutory claims has been the subject of ongoing litigation and regulatory attention. Bakhtiari & Harrison evaluates the arbitration agreement in every employment dispute engagement to determine the available forums before advising on strategy.
What can I do if my firm filed a false U5 after my termination?
A false or misleading U5 can be challenged through FINRA expungement proceedings and, in some cases, through a direct defamation claim in court. The appropriate path depends on the specific language of the U5, the facts of the termination, and the applicable deadlines. Bakhtiari & Harrison handles both approaches and advises on which is more likely to achieve correction of the record. Time is critical — contact the firm as soon as possible after a problematic U5 is filed.
I was recruited with promises that were never kept — do I have a claim?
Yes, potentially. False inducement claims in the securities industry are well-recognized. The key questions are what was specifically promised, what evidence exists of the promise, and what damages you suffered as a result of leaving your prior position. Promissory note exposure from your prior firm, lost commissions, and lost bonus compensation are all potentially recoverable. Bakhtiari & Harrison evaluates false inducement claims at no charge in a free initial consultation.
Does the firm handle employment disputes outside California?
Yes. Bakhtiari & Harrison represents financial professionals in employment disputes nationwide, in FINRA arbitration at all regional hearing locations and in state and federal court.
Contact a securities industry employment attorney — free consultation
Contact Bakhtiari & Harrison for a free, confidential consultation about your securities industry employment dispute. Our FINRA attorneys represent financial professionals nationwide. Financial professional cases are handled on a flat fee or hourly basis.
Financial professional cases are handled on a flat fee or hourly basis. Initial consultations are free.
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