In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in July 2009 and thereafter amended, the Claimants asserted various causes of action including negligence, fraud, failure to supervise, breach of contract, unsuitability, unauthorized transactions, churning, and elder abuse, which arose in connection with variable annuities investments (not specified in the FINRA Decision). Claimants sought:
The Respondents generally denied the allegations, asserted various affirmative defenses, and Respondent Wedbush filed a Cross-Claim against Respondent Wells Fargo. That cross-claim related to the alleged conduct of Respondent Saleh during her employment with Wells Fargo and Wedbush.
In the Matter of the FINRA Arbitration Between Rick Cooper, The Estate of Lauretta Kuppennan, and Kuppennan Family Limited Partnership, Claimants, vs. Debbie Michelle Saleh, Wedbush Morgan Securities Inc., Wells Fargo Advisors, LLC f/k/a Wachovia Securities, LLC f/k/a First Union Securities, and Edward W. Wedbush, Respondents
Wedbush Morgan Securities Inc., Cross-Claimant, vs. Wells Fargo Advisors, LLC f/k/a Wachovia Securities. LLC f/k/a First Union Securities, Cross-Respondent
(FINRA Arbitration 09-04522, August 26, 2011)
In February 2011, FINRA received notices from Wedbush dismissing with prejudice its cross-claims against Weils Fargo; and from Claimants dismissing with prejudice their claims against Wells Fargo.
Respondent Saleh did not enter an appearance in this matter.
SIDE BAR: An online FINRA regulatory document discloses that FINRA Arbitration 09-04522:
MATTER SETTLED ON FEBRUARY 3, 2011, WITH WELLS FARGO ADVISORS, LLC. FOR $502,000.00
Although not reported in the FINRA Arbitration Decision, FINRA regulatory records disclose that Respondent Saleh was barred from the industry on August 5, 2009, pursuant to an Offer of Settlement in which she neither admitted nor denied FINRA's allegations of misconduct. In the Matter of Debbie M. Saleh a/k/a Debbie Saleh Rubinstein, Respondent (FINRA Offer of Settlement /2005002169201, August 5, 2009).
FINRA's Complaint against Saleh (which prompted the regulatory Offer of Settlement noted above) stated in Paragraph 1 of the nine-count pleading:
[D]uring the relevant period, Saleh engaged in an extensive pattern of unsuitable variable annuity transactions, including unsuitable recommendations to purchase annuities; unauthorized and undisclosed partial withdrawals and switches; and discretionary trading without prior written authorization. As alleged below, Saleh accomplished these transactions through deceitful practices, including providing false account statements, falsifying documents with incorrect addresses and phone numbers, forged signatures, and inaccurate birth dates, and impersonating a customer on phone calls to an insurance company. Saleh also failed to disclose to customers and to her employing FINRA member firm that the majority of the transactions constituted annuity exchanges, thus avoiding additional supervisory review. Moreover, when questioned under oath by FINRA staff, Saleh provided false testimony in response to questions concerning the customer impersonation and the false account statements.
The FINRA Arbitration Panel found Respondents Saleh and Wedbush Securities jointly and severally liable and ordered them to pay to Claimants $470,885.00 in compensatory damages plus 10% per annum interest from September 30, 2008, until the Award is paid.
Further, the Panel awarded special damages to Claimants for emotional distress as follows:
The FINRA Panel found Respondent Saleh solely liable and ordered her to pay to Claimants $1,000,000.00 in punitive damages pursuant to California's Elder Abuse and Adult Civil Protective Act, Welfare and Institutions Code, Section 15600, et seq.
Further, the FINRA Panel found Respondents Saleh and Wedbush Securities jointly and severally liable and ordered them to pay to Claimants $390,000 in attorneys' fees (pursuant to Califomia Welfare and Institutions Code Section 15657.5) and $5,000 in costs.
SIDE BAR: In explaining the rationale for its decision, the FINRA Arbitration Panel offered this comment:
Based upon the evidence presented at the hearing in this matter, the Panel determined that Respondent Saleh's conduct was premeditated, egregious, and unconscionable and part of a plan or scheme to defraud her customers. Respondent Saleh's actions, including forging the client's signature on various documents, making gross misrepresentations about the securities in the client's account and the value of those securities, providing the client with false monthly account statements and executing unauthorized redemptions and/or partial withdrawals in the client's annuities in violation of her fiduciary duties. Respondent Saleh's conduct certainly borders on criminal misconduct, if not actually elevating her actions to actual criminal misconduct.