Enforcing Advisor Loans

Issue

Will courts give weight to regulatory findings and sanctions when considering an advisor’s claim that they have been wrongfully dismissed in the face of a dealer’s attempt to enforce repayment of a forgivable loan?

Key facts

Noronha (IA) was an advisor with Raymond James (Dealer). His relationship was governed by an agency agreement which included the provision of a forgivable loan. The loan was to be forgiven over the course of seven years, provided no events of default occurred. Events of default were broadly defined as including termination of the agency agreement “for any reason” and termination of the IA’s registration “with or without cause.” The agency agreement also included an obligation to abide by IIROC rules, and to indemnify the Dealer for any legal costs the Dealer incurred as a result of the IA’s (or his associates’) breach of legal duties.