Ameriprise Wins Employee Promissory Note Case

January 24, 2013

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claimfiled in August 2011, Claimant Ameriprise sought the principal balance due plus 7% interest, costs, and fees arising from Respondent Church's alleged breach of a promissory noted dated August 30, 2007. Ultimately, Claimant Ameriprise asked for $107,762.71 in damages, $3,825 00 in filing fees, and approximately $14,000.00 in attorneys' fees. In the Matter of the FINRA Arbitration Between Ameriprlse Financial Services, Inc., Claimant/Counter-Respondent, vs.  Lloyd Thomas Church, Respondent/Counter-Claimant (FINRA Arbitration 11-03134, January 22, 2013).

Respondent Church generally denied the allegations, asserted various affirmative defenses, and filed a Counterclaim asserting misrepresentation, reliance, and breach of promises relating to his employment with Ameriprise. Ultimately, Church sought  $116,000 in damages.


The FINRA Arbitration Panel found Respondent Church liable and ordered him to pay to Claimant Ameriprise $107,762.71 in compensatory damages plus 2.74% interest from March 9, 2010, until January 9, 2013.

Bill Singer's Comment

As plain vanilla a promissory note case as there is; and, frankly, I merely offer it as something to remind you that in 2013, registered representatives are still being taken to arbitration by former employers seeking to recoup the balances due on these notes, employee forgivable loans ("EFLs"), retention bonuses, etc. As with most of these cases, the FINRA arbitrators don't offer much in the way of a fact pattern or rationale. It's a bang, bang, bang case. He said. She said. We rule. Next!

Was any advantage gained by the former employee in contesting repayment of the principal balance due on the note? The simple answer: three years of deferred repayment from his March 2010 resignation until the January 22, 2013, arbitration decision - however, that extra time came at a cost of 2.74% interest.  As some registered persons would see it, Church made out okay: essentially getting a three-year loan of about $107,000 at a relatively modest interest rate.

On the other hand, as "Street Sweeper" has reported in other similar cases over the years, this tactic sometime results in, at best, delaying the inevitable, and, at worst, getting in deeper. The outcome in this case could just as easily been that the arbitrators slammed Respondent Church with additional costs, fees, and a hefty lawyer's bill from Claimant Ameriprise.

See these "Street Sweeper" columns about EFLs and promissory note cases: