Sometimes you need to read the scorecard just to figure out who's playing
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in December 2011, Claimant Lori Strayn alleged that that without her knowledge or consent, Respondents Wells Fargo and Snyder permitted her ex-husband, Robert Kevin Strayn, to transfer funds from certain Wells Fargo accounts into several E*Trade accounts. Claimants asserted various causes of action including negligence, conversion, breach of contract, breach of fiduciary duty, and constructive fraud. Claimants sought $138,700 in compensatory damages, punitive damages, interest, attorneys' fees, and costs.
SIDE BAR: You got all of that? We got the wife. We got the ex-husband. We got two - count 'em - two brokerage firms. And that ain't all of it! Before you stand for the National Anthem, here's the scorecard. And just a head's up: We got a number of scratched starters, some rookies, and a whole batch of guys playing out of position.
In the Matter of the FINRA Arbitration Between:
Claimants: Lori A. Strayn, Individually and On Behalf of the Payton Ashleigh Strayn U/NV/UTMA Account
Respondents: Wells Fargo Advisors, LLC; E*Trade Securities LLC; and Agent Fred Snyder
Cross-Claimant/Cross-Respondent: E*Trade Securities LLC
Cross-Respondent/ Cross-Claimant: Wells Fargo Advisors, LLC
Third-Party Claimants: E*Trade Securities LLC and Wells Fargo Advisors, LLC
Third-Party Respondent: Robert Kevin Strayn
(FINRA Arbitration 11-04556, March 12, 2013).
Klaatu Barada Nikto?: What's that "U/NV/UTMA" thing, you ask? That's Wall Street shorthand on the old scorecard. In this case, it stands for "Under Nevada's Uniform Act for Transfer to Minors Act." Wow, you learn a lot of stuff on "Street Sweeper" and it's all for free! Sorry - it had nothing to do with Klaatu or Gort or Earth's destruction. Hey, go look it up.
Respondents E*Trade, Wells Fargo, and Snyder generally denied the allegations and asserted various affirmative defenses.
In its Cross Claim, E*Trade Securities LLC, asserted that Wells Fargo was negligent when it failed to contact the Claimants to verify the bona fides of the ex-husband's request to transfer assets to E*Trade. Accordingly, since Wells Fargo was in the best position to have nipped this mess in the bud, that firm should be held accountable for any amounts E*Trade might be compelled to pay in excess of its apportioned degree of fault.
In its Cross Claim, Wells Fargo Advisors, LLC asserted that it was E*Trade's obligation to ensure the truthfulness, accuracy, and legitimacy of the Automated Customer Account Transfer Form("ACAT") submitted to Wells Fargo. In light of E*Trade's alleged negligence, breach of contract, and/or fiduciary duty, Wells Fargo asserted that E*Trade and Robert Strayn were wholly or partially liable.
On First Base we got the original Statement of Claim. On Second Base we got the Answers. At Shortstop we got the Cross Claims. And now, playing Third Base, we got the Third-Party Claims.
In its Third-Party Claim, E*Trade Securities LLC asserted that Robert Strayn knowingly and fraudulently transferred assets, liquidated positions, and withdrew account funds. In light of Robert Strayn's alleged misconduct, E*Trade asks that he be held accountable for any amounts E*Trade might be compelled to pay in excess of its apportioned degree of fault.
In their Third-Party Claim, Wells Fargo and Snyder asserted that Robert Strayn withdrew/transferred funds without authorization and had wrongfully and fraudulently forged his ex-wife's signature on the ACAT. In light of Robert Stayn's alleged misconduct, Wells Fargo and Snyder If Wells Fargo or Snyder ask that he be accountable and found wholly liable (or partially liable along with E*Trade).
Scratched From The Lineup
Robert Kevin Strayn did not appear at the hearing. Maybe he had a groin injury or Gort vaporized him - all of which is mere speculation, but, you know, I wouldn't exactly consider his absence a huge surprise.
The FINRA Arbitration Panel found Wells Fargo and E*Trade liable and ordered the firms to pay to Claimant Strayn:
As intricate and perplexing as the caption in this case was and given all the finger pointing back and forth by those charged with wrongdoing, it came as no surprise that the FINRA Arbitration Panel ruled in Claimants' favor. Talk to enough veteran industry lawyers such as me and you will learn that rarely does anything good come from two broker-dealer respondents claiming that the whole mess was largely or wholly the other firm's fault. What arbitrators hearing such cases tend to conclude is that a number of folks may have been guilty but the one thing for sure is that it wasn't the Claimant customer.
When you have multiple industry respondents and their strategy is to blame the other guy, it's usually best for the respondents to meet somewhere quietly, hash out who's going to offer what percentage of a settlement, and get the dispute resolved quietly - before there's a published decision and before some journalist or blogger publishes a story about the calamity. Of course, if Wall Street was predisposed to handling its miscues sensibly we wouldn't be reading about the Big Whale in today's news or about the almost-daily tales of cover-ups, failed disclosure, and arbitration outcomes such as Strayn.
For additional cases involving spousal issues, READ:
Till Death Do Us Part Stumps Stockbroker
Husband's Unauthorized Withdrawals Land Stockbroker In Hot Water
Husband Sues Advest, Credit Suisse, And Two Stockbrokers Over Wife's Unauthorized Withdrawals
Stockbroker Victimized By Husband's Withdrawals From Wife's and Child's Accounts
Stockbroker's Friend, Cousin, And Ex-Wife Collide Into One Regulatory Mess
Crumbling Marriage Collapses On Citigroup In Dispute Over Wife's Withdrawals
Notary Duped Into Signing Off On Insurance Loans Fined And Suspended By FINRA
Hubby Dips Into Wife's Retirement Account And She Successfully Sues Brokerage Firm
Mother And Daughter's Convenient Joint Account Leads to Odd Arbitration Win Against Wells Fargo
Estate Sues Over Lawyer's Designation of Ex-Wife as IRA Beneficiary
Wife Defrauded By Husband's Forgeries Sues Citibank
Spousal Cases: Till Death Do Us Part?