Due to licensing requirements regulated by the Financial Industry Regulatory Authority (FINRA), trainee brokers are not allowed to make sales directly to customers unless they are licensed. As a result, most brokerage houses and financial services companies hire trainee brokers to make cold calls, soliciting potential business from individuals they talk to over the phone. When a trainee broker contacts an investor interested in purchasing a bond or stock, the trainee broker must then transfer the call to a licensed broker who completes the sale and earns a commission in the process. As a consequence, the trainee broker typically does not earn a commission, nor is he or she paid a wage.

At the New York law offices of Leeds Brown Law and Virginia & Ambinder our brokers’ rights attorneys recover compensation for unpaid trainee brokers who are denied a minimum wage or sales commission. To learn how we can help you recover the compensation owed you, contact brokers’ rights attorneys at Leeds Brown Law and Virginia

FINRA Licensing Requirements for Brokers

Under requirements regulated by FINRA, companies, brokerage firms, and brokers that sell financial products must have a “Broker Dealer” registration with FINRA. In the case of brokers, typically one or two of the following licenses is required before a broker can sell financial products:

• Series 7 license: A basic license required to sell securities. A broker must be sponsored by a Broker Dealer, complete a training / educational program, and pass an exam.
• Series 63 license: A Series 63 license is, in many ways, similar to a Series 7 license, requiring a broker to study a body of knowledge and successfully pass an exam that tests his or her knowledge of the requirements and regulations involved.

Trainee Brokers Who do not have a Series 7 or a Series 63 License

Until a trainee broker obtains a Series 7 or a Series 63 license through FINRA, he or she cannot sell financial products for their employer. However, they can make cold calls, transferring any sales to a licensed broker for the completion of a sale. In some cases, brokerage firms and financial services companies attempt to use this as a justification for not paying trainee brokers at all.

Here, a trainee broker may be told that the experience gained in working for the firm and, the knowledge acquired, will pay off in the end should a trainee decided to get their broker’s license. As a result, not only are trainee brokers helping brokerage houses make money while working for nothing, they must also pay for any programs, testing, or licensing fees involved in the Series 7 or Series 63 license.

Brokers’ Rights Attorneys at Leeds Brown Law and Virginia & Ambinder

Most brokerage houses and financial services companies exploit young college graduates hoping to make their way onto Wall Street. In the process, they may hold out false promises of hiring them or claim the training they provide is invaluable in eventually finding one’s way inside Wall Street. In reality, many unpaid trainee brokers waste months of their lives trying to survive when the firms they work for have no intention of paying them or hiring them.

Under the requirements of the Fair Labor Standards Act, these firms are in violation of minimum wage requirements trainee brokers are owed. If you worked as an unlicensed unpaid trainee broker, we can help you recover compensation owed you.

For more information, contact brokers’ rights attorneys at Leeds Brown Law and Virginia & Ambinder today.