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The circumstances differ. Yet the process looks remarkably similar You can save this article by registering for free here. Or sign-in if you have an account.Given the hundreds (or thousands) of potential infractions of most banks' codes of conduct, if a financial adviser is targeted, a bank can easily come up with some minor violation to accuse them of, if it is so inclined, writes Howard Levitt. Photo by utah51/stock.adobe.comOver the past six months, my firm has represented an increasing number of financial advisers from Canada’s largest banks and investment companies who have found themselves the subject of sudden internal investigations culminating in dismissal for cause.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorThese have generally been advisers with books of business in the hundreds of millions of dollars or more.None were accused of theft.FP Work touches on HR strategy, labour economics, office culture, technology and more.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Work will soon be in your inbox.We encountered an issue signing you up. Please try againNone were accused of fraud.None were accused of misconduct that endangered client assets or even breached the bank’s confidentiality.The allegations generally involved policy breaches, disclosure issues, communications concerns or other code-of-conduct violations that, while serious in some instances (but entirely trivial in most), would historically in no way be viewed as career-ending events.The reality is, given the hundreds (or thousands) of potential infractions of most banks’ codes of conduct, if an adviser is targeted, a bank can easily come up with some minor violation to accuse them of, if it is so inclined. And in all of these cases, the banks were inclined.The accused have generally been highly successful but difficult employees who stood up for their clients’ interests when they diverged from the bank’s policies, such as when a new policy increased profit at the client’s expense.The pattern has become pervasive.The advisers come from different banks. The circumstances differ. Yet the process looks remarkably similar.The adviser is suddenly called into an investigation with no foreknowledge, or even suspicion, that anything is wrong. An external investigator is present. The adviser is questioned about events that might be months or years old and likely almost forgotten, and is not even given the benefit of looking at their own records.A lengthy investigation follows. And, as is all too common nowadays, the external investigator will come up with a result the bank wants them to come up with, presumably to ensure repeat business.The process is fundamentally one-sided. None of the procedural protections of a judicial trial process are provided. The advisers generally don’t have a lawyer. They don’t get to ask questions of the bank. They do not receive complete, let alone adequate, details of their supposed infraction. The bank does not have to show them any documents, but the adviser must produce everything that is asked for –– and the bank has access to all of their records in any event.There is no fairness or reciprocity in the process. The investigator works to build a case so that, by the time the adviser sues, they are already severely handicapped. They are either damned because the bank concludes they were not truthful or because they did not fully respond, and that by itself is alleged to be cause.The conclusion is preordained. The adviser is terminated for cause –– and in the context of these financial positions, it is a regulatory violation, which triggers reporting obligations. That means they are suspended from working at the bank or anywhere else while the investigation drags on.Meanwhile, the bank hopes the clients will remain with them and distributes the list to other advisers. The clients are told that their adviser has been suspended, so they naturally assume the worst and are disinclined to reengage them if or when they are regulatorily cleared to practice again.In one case I have, the adviser’s entire team was suspended, even though the team members had nothing to do with what lead to the inquiry. As a result, the connection between the adviser and their clients was entirely severed.By the time the process concludes, substantial damage has been done, irreparably and irremediably.What makes these cases particularly significant is the nature of the financial advisory business itself.Unlike most employees, successful advisers often build relationships over decades. Their value lies not merely in their technical skills but in the trust they have established with clients and the assets those clients have entrusted to them.When an adviser is abruptly removed from the marketplace, clients face uncertainty. Some wait. Others move elsewhere. Many simply remain with the institution and are reassigned to someone else.This is very different than a normal employee being terminated. If that employee is out of work for, say, eight months, they generally get another job at the same income and can recover those eight months of loss through a wrongful dismissal action. They are made whole.But in these cases, because of the nature of the process and the regulatory involvement, financial advisers lose a large portion of their clientele, suffering lifetime losses not only from the clients who moved on, but the ones that would have been referred to them by those lost clients had they not gone away.And then there is the signing bonus that any new investment houses would have paid them based on the size of the client book they bring.Whether intentional or not, the economic consequences are profound.That reality creates a governance question boards should be asking.Has the threshold for cause termination in financial services changed?If so, why?Are institutions becoming less tolerant of risk?Are regulators exerting greater pressure?Or have internal investigations evolved from fact-finding exercises into mechanisms that too frequently end with predetermined outcomes?That is certainly what I see.Having acted for financial advisers for decades, I do not recall seeing anywhere close to this volume of investigations and cause allegations against high-producing money managers across multiple major institutions.Something has changed.The question is: what?Dismissal for cause has always been the most severe sanction available to an employer.In financial services, however, it is even more consequential: a threat to a professional reputation and book of business painstakingly built over an entire career.That is why boards should concern themselves not only with whether investigations are conducted properly, but whether they are appropriately commenced in the first place.The integrity of an institution depends not merely on its willingness to investigate misconduct, but on its ability to distinguish genuine misconduct from issues that could and should be addressed through less destructive means.Because once an investigation becomes the default response, the damage is done, long before the facts are fully known.Howard Levitt is senior partner of Levitt LLP, employment and labour lawyers with offices in Ontario, Alberta and British Columbia. He practises employment law in 10 provinces and is the author of six books, including the Law of Dismissal in Canada. Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.