An irreverent Wall Street Blog
by Bill Singer
 
Join BrokeAndBroker blog on Facebook  Follow the BrokeAndBroker blog on Twitter  Connect with BrokeAndBroker on LinkedIn  Join Bill Singer on Google+  Subscribe to RSS Feed

Wells Fargo Advisors Comes Up Short in Retention Bonus Case
Written: August 29, 2012

Giant Gavel

In a Financial Industry Regulatory Authority Arbitration Statement of Claim filed in April 2011, Claimant Wells Fargo Advisors asserted that its former registered representative Respondent Fisher had failed to repay the balance due on his promissory note upon his termination from employment. Ultimately, Claimant sought

  • $530,644.45 in compensatory damages
  • $110,815.92 interest,
  • $96,252 in attorneys’ fees, and
  • $11,002.24 in costs.

In the Matter of the FINRA Arbitration Between Wells Fargo Advisors, LLC,Claimant/Counter-Respondent, vs. Randall A. Fisher, Respondent/Counter-Claimant (FINRA Arbitration 11-01681, August 27, 2012).

SIDE BAR: According to online FINRA records as of August 29, 2012, Respondent Fisher was employed at A. G. Edwards & Sons, Inc. from 1999 through January 2008, and thereafter with Claimant Wells Fargo Advisors.  In October 2007, Wachovia Corporation acquired A.G. Edwards, Inc. In 2008, A.G. Edwards & Sons, Inc., became a part of Wachovia Securities, LLC. Towards the end of 2008, Wells Fargo & Company acquired Wachovia. The online records indicate that Respondent Fisher’s registration with Wells Fargo was terminated in October 2009.

Why the FINRA Arbitration Decision didn’t provide this information is somewhat inexplicable as we lack meaningful context to fully understand this case — I mean, c’mon, at a minimum at least tell us the date of the Respondent’s termination. It would also have been helpful to learn of the date of the execution of the promissory note at issue and, if different, the date of the operable retention agreement.

Respondent Fisher generally denied the allegations, asserted affirmative defenses, and filed a Counter-Claim in which he alleged that he had been constructively discharged in breach of contract — apparently this dispute involved a retention bonus. Pointedly, Respondent alleged that Claimant’s company policies compelled his resignation. Ultimately, Respondent sought:

  • $1,696,000 to $1,775,000 in compensatory damages;
  • approximately $106,631.50 in attorneys’ fees; and
  • approximately $6,475 in costs.

SIDE BAR:  According to the FINRA ArbitrationDecision, at the conclusion of the hearing, the Counter-Claim appears to have asked for a range of compensatory damages and the “approximate” fees and costs noted. It is unclear whether this was how the claims were presented by Respondent’s counsel or if the circumstances were inferred by the arbitrators.

I’m not a fan of seeking ranges or approximate monetary awards.  Seems to me that by the time you sidle up to the bar you should sort of know what drink you’re going to order.  On the other hand, there are times when damages, fees, and costs may be an open issue subject to determination at a latter date.  Unfortunately, when ranges are presented to arbitrators, human nature being what it is, there is a tendency to assume that the lower-end is more likely the more accurate.

Then there’s the psychological impact of offering a range or “roughly” damages — all of which often conflates into alternative choices for the arbitrators. Imagine that I’m defending an accused murderer and in my closing to the jury I say that my client is absolutely innocent of the charges and wasn’t even within 100 miles of the victim, BUT if you do find that my client fired the bullet that killed the victim, then it was self defense.  Okay, sure, you can technically argue “in the alternative,” but I”m not sure that most reasonable folks will buy what you’re selling.  Sometimes you just have to stake our your claim, stand your ground, and go with what you got.

Award

The FINRA Arbitration Panel found Respondent Fisher liable to and ordered him to pay to Claimant Wells Fargo the net sum of $48,172.61.  The Panel derived that net sum as follows:

Respondent owes to Claimant:

  • $530,644.45 principal balance due on promissory note;
  • $1,391.28 pre-Award contract rate interest;
  • $109,424.64 pre-Award default rate interest;
  • $96,252.00 in attorneys’ fees; and
  • $1,552.24 in costs

Claimant owes to Respondent:

  • $594,840.00 in compensatory damages; and
  • $96,252.00 in attorneys’ fees

Bill Singer‘s Comment

Another apparent Retention Bonus case and another big question as to just what the hell Wells Fargo was thinking when it filed this arbitration against Fisher. The firm sought about $750,000 from Respondent Fisher and when all was said in done, walked away with a tad more than 6% of the damages it demanded.  If this was another attempt to “send a message” to future registered reps contemplating  jumping ship, this missive got returned to sender. Respondent Fisher and his lawyer seem to have gotten the upper hand.

Readers of “Street Sweeper” know that I’m not a fan of brokerage firmsroutinely suing their former employees for disputed forgivable loan or retention balances.  Playing the tough guy has merits and can send the proverbial message, but large brokerage firms typically face the dynamic that they are expected to win all of these disputes and can’t afford to lose one.  Firms that adopt scorch-the-Earth policies against former employees, create reputations for being vindictive, which may discourage veteran brokers from joining the firm because they fear similar retaliation if they plan to move.  I mean, seriously, do you think that a senior broker with a significant book of business is going to be attracted to a potential broker-dealer with a reputation for going hammer and tong after departing employees?

Similarly, when firms get sued by customers, former employees and managers are needed to testify in support of the company.  There’s nothing like filing a FINRA arbitration against your former brokers and branch manager to ensure that they become hostile witnesses whose testimony can be devastating to the defense of the firm.  It’s not unheard of for a former employee’s anger over the demanded repayment of a $20,000 forgivable loan to motivate damaging testimony that tips the balance of arbitrators on a panel in a six- or seven-figure customer complaint arbitration.

There is an enormous toll upon firms such as Merrill Lynch, Wells Fargo, Morgan Stanley Smith Barney, JP Morgan, and UBS to maintain the credibility of a threat to sue every former employee unless a demanded settlement is forthcoming; ultimately, you create a monster that must continue to win every contested case.  That’s simply not a reasonable expectation.  It’s that one loss out of one hundred cases that becomes the hot topic around the water coolers, the popular attached file in thousands of emails, and a published article such as this.  The legacy of a single loss easily overwhelms one hundred victories.

For additional reading:

FINRA Arbitrators Wrestle With Considerable Confusion In Wells Fargo Employment Case

Former Wachovia Employee Files $1.3 Million Forgivable Loan Arbitration Claim Against Firm

Wells Fargo and Former Employee Go Toe To Toe Over Promissory Note and Deferred Compensation 

Wells Fargo Crushed in FINRA Retention Award Arbitrations


 
[^top^]

Previous Entries
October 31, 2014
On June 3, 2013, the Securities and Exchange Commission ("SEC") announced the second-largest trading suspension in its history as part of its "Operati... Read On
October 31, 2014
For one reason or another, stockbrokers may not want to maintain their personal accounts at their employer's brokerage firm. Some of the reasons often... Read On
October 30, 2014
As with virtually every job, the practice of law often becomes mind-numbingly boring. Every so often, however, the profession presents you with a fasc... Read On
October 29, 2014
When it comes to in-house compliance and industry regulatory matters, a loan is a loan and a gift is a gift -- and the two have very different meaning... Read On
October 28, 2014
Stockbroker, Compliance, Legal, and Regulatory JobsEmployment Page BrokeAndBroker.com Jobs#wallstreetjobs @brokeandbrokerNOTICE TO EMPLOYERS... Read On
October 27, 2014
They got a name for it: padding the old expense account. The way I see it, whenever some misconduct has an acronym or generally accepted term, it mean... Read On
October 25, 2014
Merrill Lynch, Edward Jones, Large Hotel Man, And Double Charges For A Few Glasses Of WineOctober 24, 2014Voices were raised, a waitress was upset, an... Read On
October 24, 2014
Voices were raised, a waitress was upset, and large man with hotel bar intervened. Now if that doesn't pique your interest, I might as well get m... Read On
BrokeAndBroker.com Job Search
Related Topics
Tag Cloud
Internet FINRA Bear Stearns Bloomberg SEC NASD NYSE Money Laundering Due Diligence Waiver Forbes China Chepucavage Broy Woody Allen Madoff NAC NPR Marketplace Stanford UBS Ketchum Antitrust NASDAQ RRBDLAW Schapiro Bill Singer BrokerAndBroker USERRA Brokeandbroker.com Morgan Keegan Arbitration Counterclaim BrokeAndBroker.com Khuzami BrokeAndBroker Aleynikov Goldman Sachs brokeandbroker Promissory Note U4 Bill SInger EFL CFTC Huffington Post Flash Crash arbitration RBC RRBDLAW.com Ponzi Affinity Fraud Wachovia Raymond James BrokeandBroker.com Expungement Fraud Securities Fraud Outside Business Activity Registered Rep Magazine FOREX BrokerAndBroker.com FBI Banc of America Pro Se Supreme Court Morgan Stanley Smith Barney E*Trade Margin email Galleon Penson U5 Defamation Protocol Wells Fargo Punitive Damages Citigroup Merrill Lynch ARS Employee Forgivable Loan Street Legal Morgan Stanley AWC Fidelity Bankruptcy Broke And Broker HFT David Sobel Day Trading Ameriprise Commissions Spouse Schwab Commission CRD Kenneth Starr IRS CNBC Complaint ATM Skimming Hacking Phishing Malware Naskovets Poteroba Koval Lincoln Financial Selling Away Outside Business Activities Rakoff 2nd Circuit Second Circuit IRA 401k Forgery Tax RRBDlaw.com Email Netschi Moore Whistleblower Street Sweeper Tran Bharara Facebook Online Severance Bonus Eligibility Rule TD Ameritrade Hedge Fund SAC 1099 Smith Barney Lehman Brothers SIPC IC3 Scottrade Lehman JPMorgan Chase Hertz Insider Trading Bank of America Department of Justice Elles Bribe Auction Rate Securities Raiding Spam Edward Jones Medicare Diabetes Dow Schumer Thain Walter Bid Rigging Real Estate Discrimination Wall Street Statutory Disqualification Form U4 Form U5 Indictment Boyland DOJ Corruption bill singer FTC Do Not Call FINRA Arbitration Costa Rica Settlement LIBOR Varney Plea Rule 8210 Eligibility RRBDlaw Appeal Fowler LPL Johnson US Airways Reg D MSSB Vault Loan SunTrust Discovery Employment Rosenthal Recruiting Lawyer Trading Platform JP Morgan Employment Tuesday Wrongful Termination Bank Guarantee WaMu Solicitation REIT Martin Credit Cards Rule 3050 Away Account Credit Repair PN Advisor Placement Group Forex Mortgage Private Placement Moon Merrill Anderson Exam Lee Borrowing Tax Lien Conversion Oppenheimer Wedbush Felony Misdemeanor Expenses ING Lien OTR Estate Jobs Florida Credit Card Elderly Flash Drive Annuity Expense Reimbursement FNMA BrokeAndBroke TIC DWI Promissory Notes Suitability Will POA Power of Attorney Casino NSF MF Global Counterfeit Preet Bharara Corzine Hacker RIA Prison Disclosure NASAA Aguilar FCPA Subway Identity Theft Gold Dell Bar Injunction Bank Deutsche Bank Hospital God HSBC Private Placements Eric Stein Wire Fraud CCO Joshua Brown Backstage Wall Street Obstruction of Justice Reuters Retaliation Variable Annuity Arbitraiton Outside Account Options Telephone Wine Social Media ADA Pacifico Non-Prosecution Agreement Confirm Tax Fraud Retirement OBA Equity Indexed Annuities EIA MetLife Continuing Education OIP Tax Liens Willful CE Unregistered Impersonation Annuities BBVA Business Expenses ETF JOBS Act Mail Fraud Parking Variable Annuities Signatures BitTorrent Impersonator Wire Transfer Wire Crowdfunding Nasdaq Away Accounts WSP Laptop Dodd Frank Checks RMBS AML PST Solicited Unsolicited Congress SRO Wife Discretion Non-Solicitation Restaurant Commodities Private Securities Transaction Offer of Settlement Money Market employment jobs Great Recession Chase Investment Services Arrest Barclays Liens Failure To Supervise Apple Time And Price T&P Willfully Husband Letter of Authorization LOA Sexism Debit Card Knight Test Practice Sale Unfair Competition Signature Judgments Undisclosed Settlement Trainee Fee Trust Laser Side Bar Mattera Female Sales Assistant Kennedy Charge Sexist NML Argentina Embezzlement Silver Investor Alert Judgment Bank Fraud Deceased TSSB Mary Jo White Trustee Motion To Dismiss Frumento Conspiracy 6th Circuit Proctor Rule 3040 Class Action Beneficiary NYAG Schneiderman Gallagher White Self Regulation Short Sale Compromise Website TRO Supervision Vacatur SDNY BrokeAndBroker Bill Singer Piwowar Stifel Rule 1122 Article V signature Inside Information VA Regulation SP Customer Rule 3270 Rule 3240 OWB 2Cir Stockbrokers
 
Email Bill Singer Connect with Bill Singer on Facebook Follow Bill Singer on Twitter Link up with Bill Singer on LinkedIn Join Bill Singer on Google+