Wells Fargo Advisors deemed 'vindictive' in arbitration win for adviser

Citing Wells Fargo Advisors' "vindictive" actions against a former adviser, a Finra arbitration panel on Monday awarded the adviser, Aaron Olson, $1.43 million in a dispute that centered on Olson's employment at Wells and termination from the firm.

A 16-year veteran of the financial advice industry, Olson worked from March 2019 to August 2020 at Wells Fargo Advisors, according to his BrokerCheck profile. He is now managing principal at Purpose Comprehensive Wealth Management, a registered investment adviser in suburban Charlotte, North Carolina, that opened last year.

Finra arbitration panels seem to be focused on claims involving firms making defamatory statements about former advisers. Just last month, a panel ordered J.P. Morgan Securities to pay $1.4 million in damages to a former financial adviser who sued the firm claiming it had dirtied up his employment history when he was “discharged,” meaning fired, almost five years ago.

The majority of decisions and awards made by Financial Industry Regulatory Authority Inc. arbitration panels don't give any reasoning or details about a decision. But in this case, the three arbitrators took Wells Fargo Advisors to task for what the firm said about Olson on his Form U5, a standard form firms must submit to Finra to detail an adviser's work history when he or she leaves the firm.

Part of Olson's lawsuit against Wells Fargo Advisors alleged defamation, according to the award. The panel concluded "the actions of at least one management level employee" resulted in the filing of an amended Form U5 that was "vindictively motivated," according to the award.

"The panel concludes that, under all of the evidence and reasonable inferences therefrom, the filing of and the information in the amended U5 was both vindictive and defamatory in nature causing material and continuing harm to [Olson's] reputation and career as a financial advisor," according to the award, which did not cite the specific language at question.

Olson declined to comment Tuesday morning, and his attorney, Tom Momjian, did not return a call to comment.

A spokesperson for Wells Fargo Advisors said the firm was "disappointed" with the arbitration panel's decision.

"We are disappointed with the decision and believe we followed Finra requirements and guidance in filing an amended U5 for this former employee," the spokesperson wrote in an email.

The Finra panel initially awarded Olson $1.8 million but subtracted $367,000 to satisfy Wells Fargo Advisors' counterclaim against Olson for payback of a promissory note. Such notes are common ways to incentivize brokers and financial advisers to begin working at a new firm and are paid off over time, usually seven to 10 years.

The panel ordered Wells Fargo Advisors to pay Olson $700,000 for two claims, one for fraud and the other for defamation. It also ordered the firm to pay its former adviser another $400,000 in punitive damages under North Carolina law.

In November 2020, Wells Fargo Advisors lost another arbitration claim to a broker who alleged the firm had made damaging remarks part of her work history; the single arbitrator in that claim awarded that adviser, Amy Webster, $30,000 for attorney's fees.