Amazing Chutzpah – Securities America asks reps to “pinky swear” reports InvestmentNews

Posted by on Jun 9, 2011 in Uncategorized | Comments(0)

So when is a contract not a contract? Or is it a contract? In a bizarre move, Securities America has asked its representatives to sign pledges of loyalty to the firm. The real question in my mind is this – which has more legal validity, the loyalty letter or a “pinky swear”? Perhaps they’re the legal equivalent.

Investment News reports that a letter went out to the sales force and is essentially asking for a pledge to stay. What happens to those brokers who don’t sign? What happens to supervisors whose brokers don’t sign? If a broker leaves, will Securities America pursue him/her for breach of a “pinky swear”?

Who came up with this idea? What will happen if these scenarios occur? 1) a broker is fired for not signing the pinky swear or 2) a broker claims breach of contract because they signed the pinky swear and was later fired for other than compliance reasons. Hmmmm. This won’t keep me up at night, but I’m thinking that this was a retail-side idea and not vetted by lawyers.

That’s the under-90 degree view of one lawyer from Jupiter, Palm Beach County, Florida. I’m Marc Dobin.

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