Click to read WSJournal Story:  Signing Bonuses Haunt Wall Street, 10/11.

Wall Street firms are experiencing buyers remorse.  After paying star RR's and FA's 6- and 7-figure signing bonuses to jump ship over the past 2 years, the firms are finding that the market turmoil has severely impacted the brokers' ability to generate significant production.  Some frustrated firms that want to get their money back, have gone to the arbitration forums at FINRA Dispute Resolution.

So far this year, FINRA arb panels have issued about 165 awards related to "promissory notes" - about 17% of all FINRA arbitration awards in 2010, which is the highest percentage in a decade.  - want their money back because the new hires proved to be huge disappointments.  Fortunately for the firms, they win a high percentage of these cases - even if they have to agree to be repaid over time or for a percentage of what was loaned out.  

• In September, Wells Fargo won an arbitration case against a broker who was ordered to pay back the $1 million he received when he moved to the bank from Merrill Lynch in 2008.

• UBS AG execs are trying to squeeze more production out of several hundred brokers in the U.S. who received bonuses to join the company but haven't brought in enough clients or other revenue to become profitable for the Swiss bank. UBS has about 6,700 brokers in the U.S.

• UBS and other brokerage firms also have looked into the broker contracts to see how much wiggle room they have where new brokers fall well short of revenue expectations.  So far, company officials have concluded that they don't have much leverage unless a broker leaves the firm voluntarily. 

UBS made a big investment in new brokers near the worst of the financial crisis, hiring about 1,400 in a 9-month period in 2008 and early 2009.  Some brokers got 160% of fees and commissions generated in the previous year.  Those costs still hang over the Swiss bank.  In the first half of 2010, the company reported $321 million of expenses related to recruiting brokers - about 20% of total compensation for UBS brokers in the U.S.  At some firms, signing bonuses and similar retention awards for brokers exceeded $10 million - and that's  in addition to the $3-$5 million in yearly fees and commissions that the broker earns.

Some financial advisers contend that they walked away after getting a signing bonus because their new firm didn't provide the support or services needed to be successful.  That argument rarely prevails, though, because many brokers sign contracts pledging to repay their firm if they bolt.