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?
Shorter waits for failed SIE and Series 7 candidates take effect Jan. 19, speeding the path to registration
Raymond James and Cetera also welcomed advisors from UBS and LPL as competition for experienced teams stays fierce
Jim Walesa worked in the securities industry for 39 years before leaving in 2021.
As the market turned from pricing in cuts to betting on hikes this year, the developing reality of a K-shaped economy has had real implications for households and investors alike.
Alleged cash payments, stolen client data, and a court that jumped the gun
Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.
As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor
