Finra panel rules Wells Fargo on hook for $3.4 million in claim over elderly client’s account

A three-person Finra Dispute Resolution Services panel the day after Christmas awarded a Wells Fargo Advisors client $3.4 million in damages and costs in a claim that centered on his elderly mother’s position in stock of Aflac Inc., the insurance company.

The client, Tony Mathis, in 2023 sued Wells Fargo Advisors and financial advisor Stephen L. Smith, claiming breach of fiduciary duty, negligence, and other allegations related to the client’s investment in Aflac, according to the Finra arbitration award, which was issued Dec. 26.

According to the BrokerCheck report for the advisor Smith, the claim against Wells Fargo Advisors alleged “inaction to prevent unauthorized trades in the account of their elderly client with declining health.”

Mathis, the executor of the estate of his mother, Genell Mathis, requested $4.7 million in damages tied to the present value of Aflac shares, as well as other costs and damages.

“We take the protection of our clients seriously, and we respectfully disagree with the panel's decision,” a spokesperson for Wells Fargo Advisors wrote in an email.

Wells Fargo Advisors has procedures in place for warning signs of financial exploitation, and the claimants in this case alleged the firm missed those, said Rhett Owens, an attorney with Bodewell Law who represented the claimant in the dispute.

“This claim against Wells Fargo Advisors arises from the transfer in July 2020 of almost 75,000 shares of Aflac stock that Genell Mathis purchased at a low cost basis, buying the stock from the company’s founder,” Owens said. The stock represented almost $2.5 million of value, he added.

At the suggestion of family members, Genell Mathis transferred those shares, Owens said, after some in the family convinced her the stock transfer would avoid estate tax liability.

“Evidence suggested that the family knew that was false,” said Owens, who, along with attorney Tyler Pritchard, alleged the firm missed warning signs about such transactions, including the sudden interest of a family member and one person in the family participating in almost all the transactions and stock transfers.

Genell Mathis died in September 2020 at age 86, Owens said.

Also in December, two Wells Fargo branded broker-dealers lost an arbitration claim 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.