Advisors should be aware of what they sign

February 07, 2019

A case comment authored by Securities Defence Litigation partners John Fabello and Gillian Dingle has received profile from key industry publication, Advisor’s Edge.

The Advisor’s Edge piece profiles case comment “Enforcing advisor loans: Raymond James Ltd. v. Noronha 2018 ONSC 4997” which explores the importance of wording and the weight of regulatory findings and sanctions when disputes arise in dealer loan agreements.

In this case, there was an agreement between the dealer and advisor including the provision of a forgivable loan, which, if terminated “with or without cause,” had to be repaid by the advisor. Because the case involved misconduct, the advisor was disciplined by the IIROC and the dealer sued him for the loan’s balance.

The court accepted the dealer had proven the advisor breached the agreement by refusing to repay the loan without factoring in the IIROC decision.

Speaking with Advisor’s Edge, John said “advisors can find themselves on the hook for loans after dismissal, no matter the cause.”

“Only in unique circumstances will they be relieved of the obligation to repay that loan. Even where an advisor is terminated without good cause—provided the termination is in good faith—the advisor would likely have to repay the loan,” he said.

Our team has written a number of case comments which you can access on the relevant page.

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