Two Wells Fargo branded broker-dealers lost an arbitration claim on Thursday to two investors who were awarded $300,000 over alleged breach of fiduciary duty and fraud related to “various unspecified securities,” according to the award, which was overseen by Finra Dispute Resolutions Services.
The claimants, Richard and Ann Grace, who represented a family trust, sued Wells Fargo Advisors Financial Network, or FiNet, along with Wells Fargo Advisors last year. FiNet is the independent broker-dealer arm of Wells Fargo Advisors. The name of the financial advisor at the center of the claim was not revealed as part of the award.
The Richard and Ann Grace were seeking much higher damages from their lawsuit against Wells Fargo; in their statement of claim, they requested $517,000 in compensatory damages; $11,000 in forensic accounting fees; attorneys fees of $40,000; and treble damages, made possible under California law, of almost $1.6 million.
A spokesperson for Wells Fargo Advisors declined to comment about the award. Marc Zussman, an attorney for the Grace family, did not return a call to comment.
The three-person arbitration panel gave no explanation about their decision, which was split in two parts: $130,000 in compensatory damages and $170,000 in interest, dating back to 2016.
The arbitration proceeding took place in San Francisco, according to the award.
“It’s California law for the preeminent protection for seniors, the disabled, and veteans when they are the victims of any unfair practices,” said Brandon Reif, a securities attorney. “The damages can be tripled if the customer meets the qualifications. But the arbitrators did not find triple damages here.”
According to its BrokerCheck profile, Wells Fargo Advisors FiNet has no action against it from regulators so far in 2024.
The last major regulatory sanction against Wells Fargo Advisors and FiNet was in August 2023, when the Securities and Exchange Commission penalized Wells Fargo Advisors $35 million for overcharging advisory fees to certain clients who opened accounts prior to 2014 through the end of December 2022.
"Certain financial advisors from Wells Fargo and its predecessor firms agreed to reduce the firms’ standard, pre-set advisory fees for certain clients and made handwritten or typed changes on the clients’ investment advisory agreements that reflected the reduced fees at the time their accounts were opened," the SEC stated at the time.
But some clients never got the agreed-upon discounts, the SEC charged.
Read more: What is the SEC?
Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.
From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.
"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.
Chair also praised the passage of stablecoin legislation this week.
Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
