Wells Fargo Advisors fires back in Georgia court dispute over arb decision

In its appeal, the firm argues that the judge was wrong and that the arbitration decision it had initially won against a client should stand.

Wells Fargo Advisors this week took aim at a Georgia Superior Court judge’s order dismissing an arbitration claim that Wells Fargo had won 2½ years ago involving a client who sued the firm for mismanaging his account.

In the Wells Fargo Advisors appeal, which was filed Monday in Georgia’s Court of Appeals, the firm argued that the judge, Fulton County Superior Court Judge Belinda E. Edwards, was wrong and that the arbitration decision it had won initially should stand and not be overturned.

In 2017, Wells Fargo Advisors client Brian Leggett filed a complaint in Atlanta with Finra arbitration, suing the firm and his broker for $1.5 million and alleging that Wells Fargo failed to adequately train, monitor and supervise two registered reps who mismanaged his account. In 2019, Leggett lost that claim, with the three Finra arbitrators denying the allegations, according to the decision at the time.

Either the claimant or the defendant can go to court to overturn an arbitration panel’s decision, but they’re highly unlikely to get a favorable ruling. But on Jan. 25, Edwards ordered the dismissal of Wells Fargo’s legal victory over its client, Leggett.

“The trial court vacated the [arbitration] award notwithstanding that the factual findings in its order are false and wholly unsupported by the record,” according to the Wells Fargo Advisors appeal. “If this court does not reverse, the trial court will have effectively deprived [Wells Fargo Advisors] of the benefit of the written contractual bargain that it had struck with Leggett.”

At the center of the judge’s order to undo Wells Fargo’s July 2019 victory was her condemnation of alleged manipulation in the way arbitration panelists, who ultimately approve or deny damages in such claims, are selected under the aegis of the Financial Industry Regulatory Authority Inc.

Any mismanagement of the decades-old process, which uses a computer-generated list to select arbitration panelists in an effort to reach neutrality between the two sides, would be a violation of industry rules.

“As we previously stated, Wells Fargo follows all Finra rules and procedures for the arbitrator selection process, as we did in this case,” a Wells Fargo spokesperson wrote in an email. “We continue to adamantly deny the allegations cited in this decision and have proceeded with the appeal.”