By Erwin J. Shustak, Esq. of Shustak Reynolds & Partners, P.C. posted on Monday, March 18, 2019.

Erwin J. Shustak

Managing Partner

Location: San Diego, California
New York, New York
Phone: (619) 696-9500 (Ext. 109)
(800) 496-5900 (Ext. 109)
Email: [email protected]

Recently, Waddell & Reed, Inc. announced it would be closing all of its offices by the end of 2020, forcing all of its representatives to find- and pay for- their own office space, assistants and other expenses that Waddell & Reed may be contractually obligated to pay for.  Those affected advisors may have substantial legal claims against the firm for breach of contract and other claims. 

Many Waddell  & Reed advisors, who joined the firm under the Choice Financial Advisor or Professional Career agreements, were assured, many in writing, that the firm would pay for branch office space, OSJ and Compliance fees, pre- and post-sale support and other expenses.  Many advisors were given letters by management assuring them the firm would pay for these expenses despite the actual contract language that required the advisor to bear these expenses.  Many of the affected advisors appear to have joined the firm prior to 2017 when Waddell & Reed was using form contracts it then modified by letters that contradicted portions of the contracts that discuss the payment of office space and these other expenses.

Now that Waddell & Reed has announce it will be closing its offices, and shifting the expense for office space and other overhead to the advisors, it is asking many advisors to sign a new form of agreement that “supersedes and replaces” the prior agreements.  Those unwitting advisors who actually sign the new agreement may be jeopardizing their legal claims against the firm for shifting to the advisors various expenses the firm had committed to paying.

We are happy to speak to and Waddell & Reed employees affected by the new policy of closing offices and shifting expenses to the advisor to discuss their rights and determine whether they have viable, and in many cases, substantial claims against the firm that could be used to reduce any loan balances owed by the advisor to the firm and recover monies from the firm based on this change of business plan.

Shustak Reynolds & Partners, P.C.  focuses its practice on securities and financial services law and complex business disputes.  We represent many broker-dealers, registered representatives, investment advisors,  investors and businesses. For more information, contact Erwin J. Shustak, Managing Partner at [email protected], or call 800.496.5900 ext. 109.

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