(This is the third in a three-part series on broker-dealer U5 Forms.)

If there is a chance for brokers to influence the termination language in their Form U5, they should take it with gratitude, because more often than not there isn’t one, say lawyers and recruiters.

Brokers do have a small window in which they can negotiate a quiet departure in their termination language, but Finra filings suggest that broker-dealer companies keep that window short.

A broker trying assess how much room there is for negotiation first has to recognize there are different rules for brokers who are employees of a company than for those who are independent.

“In either case, you’re not letting the firm know you’re leaving until the day you’re ready to go. But if you’re independent, there’s not going to be any pushback on the U5 language because [the firms] don’t have a motivation to harm,” said Jodie Papike, president of financial services recruiter Cross-Search in Encinitas, Calif. “They don’t have advisors who are going to take that book of business.”

But for brokers who are employees of the larger wirehouses, it’s a different story, she said, and not just because the firms covet the clients’ assets.

“I have seen some advisors thrown under the bus over a firm issue. ‘Hey regulators, we got rid of a problem,’” Papike said in illustration. “But it really was a case of the firm not supervising properly or not having procedures in place.”

Under these circumstances, the firm will be less likely to have a conversation about the U5 language. The same goes for situations where there was a misunderstanding or an unintentional error.

“There is no set process,” she said. “I’ve seen situations where someone is trying to talk to the firm, but won’t get a call back. I see this harming advisors all the time. You just don’t know how long that window will be open for. If the firm takes 30 days, then you have room for negotiation. But they could file right away, and then you have nothing. Get an attorney.”

Louis Diamond, a recruiter and president of Diamond Consultants in Morristown, N.J., agreed, but added that not just any attorney will do.

“You need a specialist with experience with Finra and employment transitions,” he said. “It has to be a specialist, not the attorney who handled your divorce agreement or your brother-in-law.”

Depending on the circumstances of the termination, the broker’s attorney might be able to work with the firm’s counsel. But it’s not really a true negotiation, warned Barry Lax, the founding partner at New York’s Lax & Neville. No matter what the broker’s counsel might add to the conversation, the firm gets the final say.

The language of the form “has to be accurate and truthful,” Lax said. “But there are a lot of different ways to tell the truth and still be accurate.”

And even small differences in language can have a huge impact. In one dispute resolution between a broker and Wells Fargo, the two sides argued over the difference between the terms “permitted to resign” and “voluntary resignation.” That arbitration took two and a half years to resolve, and the advisor’s request for the latter language was denied.

The “claimant testified that he expected his CRD Form U5 would read ‘voluntary resignation.’ It was undisputed that ‘permitted to resign’ would be perceived very negatively by potential employers in the industry. And, indeed, claimant testified to multiple attempts to secure similar employment, including in places where he knew someone who had expressed a desire to work with him. Claimant was diligent in attempting to renew his career and testified that he submitted over 100 applications before ultimately securing a new position similar to the last one he held with [his former employer],” the Finra award stated.

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