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Temporary Restraining Orders

As a financial advisor, you may encounter some unexpected hurdles upon changing firms. For example, within your first few weeks at a new firm, you may receive a court order dictating that you may not contact your old customers. Stupefied, you as yourself what may have happened. You haven't been to court. You don't have a lawyer. You were under the impression that every financial advisor maintained the right to solicit his or her old clients. How did this happen?

The order in question is probably something called a temporary restraining order, often referred to as a TRO. In some courts, it is called an Order to Show Cause with temporary restraints. Most individuals are familiar with these kinds of orders in cases involving domestic violence, but they apply to other situations as well. In the event that one party can prove to the court that it needs an emergency order to prevent irreparable harm, it may be able to obtain such a temporary restraining order before the other party even knows there is a court proceeding.

Another thing to note about these kinds of orders is that they are very short term. They last only about one to two weeks. At the end of that time, there will be a hearing to determine whether the order should stay in place. While the brevity of the order may seem like a relief, it unfortunately means you have very little time to prepare for what a rather unexpected trial. For a stockbroker or a financial advisor, that hearing will be scheduled to take place within 15 days of the TRO, and will take place in a FINRA arbitration, not in court.

Read the order carefully. It is an order of the court. If you violate it, you will be in "contempt of court" and subject to fines and even jail time for doing so.

The first thing you need to do is acquire a lawyer. If you have joined a large firm, they may provide one for you, or will, at the least, be able to recommend a lawyer. If not, you need to find a lawyer experienced with FINRA arbitration and cases rooted in the mechanics of the financial industry. In addition, he or she must be familiar with such industry Issues as the Protocol for Broker Recruitment, and FINRA regulations concerning the transfer of accounts between brokerages. You much be sure to acquire a lawyer who is well-versed in both court and FINRA proceedings. Lubiner, Schmidt & Palumbo’s lawyers have extensive experience handling these cases. Call us for a consultation today.

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