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Wells Fargo Wins FINRA Hostile Work Environment Promissory Note Arbitration
Written: 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.
Award

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.

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