The Fine Art of Quitting 

During the last episode of “Looking Out for ‘U’,” Regina Repp had dismissed her attorney’s warning as alarmist and signed BeeDee Securities LLC's (“BeeDee”) Association Agreement, which is required for all new hires.  She’s been at BeeDee for about six months now and has built up quite a nice book of business.  

Unfortunately, Regina not only failed to heed the advice of her lawyer in signing the BeeDee contract, she also ignored the street noise about BeeDee itself. True, she had heard some troubling rumors --- but she dismissed them as so much sour grapes. Hey, after all, it’s a fairly big firm with offices around the country. In the final analysis, Regina moved to BeeDee because they made her a quick job offer with very competitive terms.  Right now the market’s tough and our heroine just didn’t think she could afford to pass up the attractive offer.  

But regardless of her ultimate decision, Regina should have checked out her prospective employer’s background and reputation. Regina could have spoken with her peers in the business, as well as headhunters that specialize in the industry. She could also have logged onto the NASDR’s and SEC’s websites to check out the firm’s disciplinary and litigation history.  And there are several chat-rooms on the Internet dedicated to broker-dealer matters; many of which have boards on which RRs exchange information about broker-dealers. 

But Regina took none of those steps and so she ended up at BeeDee.  And despite her hefty commissions, Regina is not a happy camper.  The firm did not promote camaraderie.  To the contrary, they pitted broker against broker. Commissions were routinely docked for a whole host of perceived transgressions. And the stock pushing!  BeeDee “encouraged” (yeah right!) the sale of risky investments that were unsuitable for virtually anyone. All brokers were forced to meet various production quotas, and some of the demands bothered Regina: house stocks, so-called “special” promotions, etc.  BeeDee enticed Regina with a glossy brochure and a lot of admirable representations --- but now she was wondering what kind of firm it really was. Lately there had been rumors about regulatory investigations, growing customer complaints, even a Grand Jury investigation. 

This morning Regina got called into her branch manager’s office. The manager, Ivan U. Tusell, told her that his nephew would soon be joining the firm and that Regina’s new account leads would be cut in half and transferred to the new guy. Ivan also told Regina that he had decided to give his nephew the corner office --- which had previously been promised to Regina.  Finally, Regina was advised that all the accounts of departing RRs, (which had always been divided up among the branch’s producers based upon a time-honored formula reflecting top production) would now go exclusively to the nephew.  

The next day Regina started looking for another job. She called her cousin Reggie Repp, who works for New Broker/Dealer Corp. (“New BD”). She explained what was going on at BeeDee and begged Reggie to get her an interview at New BD. Reggie got Regina an appointment to meet with his firm’s Regional Manager Howie Duing.  During the ensuing interview it became painfully clear to Regina that BeeDee did not have a great reputation, in fact,  Regional Manager Duing called it a boiler room and said that he was not inclined to hire anyone from such a place.  Nonetheless, Regina convinced him that she was an honest, hard-working salesperson, who had made an error going to BeeDee. The Regional Manager asked her if there were any “yes” answers on her Form U-4, to which Regina proudly answered “no.” The Regional Manager says that out of consideration to Reggie, he’ll give Regina a shot and will start processing the paperwork needed to convey a formal offer to her. 

On Monday morning Regina walks into Ivan U. Tusell’s office and tells him that she’s thinking of leaving. He asks her why.  She says that she’s become uncomfortable with the way things are done at BeeDee and has spoken to New BD and they’ve made her an offer. Her Branch Manager seems sincere when he asks her to reconsider. He promises to get her a 20% raise and the next corner, window office.  He begs Regina to hold off on any decision until Friday.  She agrees --- not even reluctantly.  An extra 20%! A window office!! Maybe they’re finally appreciating me!!! 

Upon her return from lunch, Regina’s security card inexplicably doesn’t open the door between the reception area and the boardroom. She is then greeted by a security guard and unceremoniously “escorted” out the door. She is denied access to her desk, to her files, to her computer.  Fired and dumped on the street.  Regina goes home and calls up New BD and tells the Regional Manager that she’s available to start work tomorrow.  He reminds her that there’s still some preliminary paperwork to be processed and will call her within a few days to have her come in and sign whatever’s necessary.  

Regina smiles that she has out-foxed BeeDee --- she kept all of her basic client information, i.e. names and phone numbers, on her personal Palm Pilot and home PC. She starts contacting her accounts and tells them she has taken a job with a “better” firm and was glad to be out of BeeDee. By Tuesday morning several of her clients had contacted BeeDee and requested the transfer of their accounts to New BD.  On Tuesday, Regina met for lunch with her loyal sales assistant and two top producers and agreed to put in a good word for them at New BD.  

Given Regina’s clean Form U-4 she was able to TAT her registration over to New BD.  Regina had all the paperwork ready, but for a few things here and there.  However, rather than get all the forms out and pushed through she decided to take a few days off --- a long-entitled vacation she thought.  On Friday evening, upon returning home from the beach, Regina hears the following phone message: 

“Regina, this is Howie Duing, Regional Manager for New BD, we’ve got a problem.  New BD was just served with a TRO by BeeDee, and it names you and several “John Does.” There’s also a statement that you are under investigation for possible sales practice violations and they’re claiming that you stole customer account data and wrongfully attempted to recruit their employees.  We need to speak immediately.” 

Think about the choices that Regina made since she last sought the advice of counsel.  How many mistakes has she made along the way?  What could she or should she have done instead?  What will happen next? Can an attorney help her? These questions and more will be addressed in the next installment of Looking out for U when Regina and her attorney discuss her options and what will likely happen.