Before entering a deal, and signing your bonus contract, read ALL the number of provisions.
The Wall Street Journal reports on Aug 2, that some bonus contracts reviewed by Dow Jones and several securities lawyers, show that some advisors in recent years have waived their right to file counterclaims against their ex-employer in arbitration proceedings that involve unpaid bonuses.
Under these contracts, if an advisor leaves the company without repaying a bonus, and the brokerage takes the advisor to arbitration to reclaim the money, the advisor can’t respond with direct counterclaims unless it’s simply a claim to prove they did repay the bonus. Brokers who have other grievances would have to file claims in separate proceedings.
(Counterclaims are an important negotiating tool for brokers in bonus cases and can involve complaints about failed promises or another type of grievance that would not warrant filing a separate case involving more time and money.)
It should be noted that Dow Jones interviewed over half a dozen lawyers for the report, and nearly all of them said it’s unusual for a brokerage to include a no-counterclaim clause in a bonus contract. However, a couple of them said it’s not uncommon.
So, check the fine print before you sign!