Wells Fargo Wins FINRA Hostile Work Environment Promissory Note Arbitration

April 29, 2013

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in March 2011, and as amended thereafter, Claimant Wells Fargo Advisors, LLC  asserted 
  • breach of contract; 
  • unjust enrichment; 
  • conversion; and
  • breach of fiduciary duty
in connection with Respondent Farr's employment. Claimant sought $203,213.53 in compensatory damages, punitive damages, costs, attorneys' fees, and pre-judgment interest. In the Matter of the FINRA Arbitration Between Wells Fargo Advisors, LLC, Claimant, vs. Douglas T. Farr, Respondent (FINRA Arbitration 11-00908, April 25, 2013).

Respondent Farr generally denied the allegations, asserted various affirmative defenses, and asserted a Counterclaim, which alleged:
  • misrepresentation; 
  • change of pay grid; 
  • alienation; and
  • hostile work environment. 
In his Counterclaim, in addition to punitive damages, interest, attorneys' fees, fees, and costs, Respondent Farr sought at least: 
  • $35,000 for loss of assets; 
  • $100,000 for lost income; 
  • $100,000 for loss of future business earnings, and 
  • $350,000 for  loss of income and bonuses.

The FINRA Arbitration dismissed with prejudice Respondent's Counterclaim; and found Respondent Farr liable and ordered him to pay to Claimant Wells Fargo:
  • $199,777.13 in compensatory damages:
  • $34,114.16 pre-judgment interest at the rate of 7.35% from October 20, 2010, through April 16, 2013;
  • $75,000.00 in attorneys' fees; and 
  • $21,718.47 in costs.
Bill Singer's Comment

Not a particularly complicated case but one that I offer to show the various causes of action asserted in defense of these promissory note / Employee Forgivable Loan ("EFL") disputes. Registered representatives may nod a knowing head when they read about such complaints as changed pay-out girds and hostile work environments. 

Notwithstanding, RRs should also note that the $203,000 in damages sought by Claimant Wells Fargo ultimately mushroomed into about $331,000 in total damages, interest, fees, and costs -- about a 63% premium to Respondent Farr as the cost of trying the case.  Moreover, Respondent likely incurred considerable attorneys' fee, costs, and expenses of his own in taking the dispute to verdict.

Also READ: