Former Barclays Brokers get Employee Forgivable Loans Knocked Out in FINRA Arbitration

A Miami-based FINRA arbitration panel has ruled that two former financial advisers of Barclays do not have to repay a total of over $3.8 million allegedly owed by them pursuant to promissory notes executed in connection with signing bonuses, despite the fact that they left the firm.

According to a recent report in the Wall Street Journal, the brokers, Ileana Delahoz Platt and Rafael Enrique Urquidi, joined Barclays in 2012 and received signing bonuses in the form of “forgivable loans”, which is a customary practice in the industry. These loans, evidenced by promissory notes, are typically forgiven over time provided the employee remains employed with the firm. However, shortly after Ms. Platt and Mr. Urquidi went to work at Barclays, the bank eliminated its business in the market where their clients were located, and, according to their attorney, the advisers could no longer service many of their clients, obliging them to leave the firm to seek out other employment.

In the FINRA arbitration proceeding, Ms. Platt and Mr. Urquidi sought compensatory and other damages, as well as a declaratory judgment that any amounts due under their loan agreements would be offset and that they would owe nothing under the promissory notes. Barclays, in a counterclaim, requested compensatory damages against the two advisers in the amounts it claimed were due and owing on the promissory notes at the time they left the firm.

The FINRA panel, in its award, denied Barclays’ counterclaim and held that Ms. Platt and Mr. Urquidi did not have to repay the loans. As is typical with FINRA awards, the panel did not provide a reasoned decision for its ruling. The award is noteworthy because it is often difficult for brokers to knock out 100% of a forgivable loan once they’ve left the firm.

Rich, Intelisano & Katz, LLP represents employees in the financial services industry in employment disputes, including compensation and bonus claims, wrongful termination claims and constructive discharge matters.

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