Strategic Legal Guidance For Financial Professionals In Promissory Note Disputes
Disputes related to promissory notes – or “EFLs” (employee forgivable loans) – usually arise when a brokerage firm demands the repayment of the balance of a loan that the firm previously made to a securities professional as part of an employment package. Under these common arrangements, the forgivable loan provisions of a professional’s employment contract state that the remaining balance on the loan becomes immediately payable if the firm terminates the broker’s employment, or if the broker chooses to leave the firm, within a certain period of time.
With over four decades of experience, attorney Michael J. Betts has the knowledge and skills necessary to help securities professionals defend against these claims. He also provides guidance to clients on the potential for counterclaims that may be asserted against the claimant firm.
Defending Against Promissory Note Claims
Often in these cases, the broker will file a counterclaim against the firm alleging that the firm breached promises that were made to the broker as an inducement to the broker to leave his or her previous firm. Depending on the facts of any given case, there also may be other grounds for the assertion of counterclaims in response to a firm’s promissory note claim.
These claims are nearly always filed by firms as FINRA arbitration cases under FINRA’s Code of Arbitration Procedure for Industry Disputes, Rules 13100 through 13905. In certain cases, FINRA arbitration panels have ruled in favor of brokers in avoiding, or reducing, any repayment obligation under the note and/or have found in favor of a broker on his or her counterclaim so as to offset or reduce the broker’s repayment obligation.
The FINRA Arbitration Process For Promissory Notes
FINRA Rule 13807 – entitled “Promissory Note Proceedings” – provides for an expedited process for the arbitration of cases involving a member firm’s claim that an associated person failed to repay money owed under a promissory note, particularly when the associated person does not file an answer to the firm’s statement of claim. This rule also governs the number of arbitrators who will be appointed to decide the dispute, with one arbitrator appointed in certain cases and a panel of three arbitrators appointed in other cases (e.g., if the associated person files a counterclaim for damages of more than $100,000).
Your Partner in Defending Promissory Note Claims: Call Michael J. Betts LLC Today
If you are a securities professional facing a dispute, a seasoned lawyer can provide vital support. Attorney Michael J. Betts understands the complexities of promissory note agreements. He provides personal and hands-on legal support to help you navigate this high-stakes matter. Schedule a consultation at his Pittsburgh office today to discuss your case. You can call the firm at 412-899-6827. You can also send a message through his website.