Marvin Gaye asked, as only Marvin could: Can I get a witness? And that question attracted additional interlocutors in the form of Dusty Springfield, the Rolling Stones, SonReal, and others. In a recent Financial Industry Regulatory Authority arbitration, a husband on his way to seeking a divorce asked if he could get an expert witness in his case against his wife. The stockbroker who apparently serviced the couple's joint account at Wells Fargo apparently answered the call. Oh my . . . this is going to turn into one hell of a mess but with a great soundtrack!
Case In Point In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in August 2015, public customer Claimant Darra Munn alleged breach of fiduciary duty. Given the truly novel - should I say bizarre? - nature of the underlying facts, I will allow the FINRA Arbitration Decision to explain:
[T]he cause of action related to Claimant's allegations that Napier, acting as WFA's agent, accepted employment by Claimant's husband as an expert witness during their divorce proceedings regarding their WFA joint account. Claimant asserted that Napier's actions violated his fiduciary duty to her and caused her to incur fees.
By the close of the hearing, Claimant Munn sought $33.856.00 in compensatory damages, punitive damages, interest, attorneys's fees, and costs. In the Matter of the FINRA Arbitration Between Darra L. Munn, Claimant, vs. Wells Fargo Advisors, LLC and Dana Brent Napier, Respondents (FINRA Arbitration 15-02214, August 30, 2016).
Can I Get An Expungement? Respondent Wells Fargo and Respondent Napier generally denied the allegations and asserted various affirmative defenses. Respondents requested the expungement of the matter from Napier's Central Registration Depository records.
And The Answer Is . . . The sole FINRA Arbitrator denied Claimant's claims and found that there was no breach of duty. Also, the Arbitrator dismissed without prejudice the request for expungment based upon Napier's purported failure to pursue that requested relief during the hearing. Bill Singer's CommentLemme see if I got this.A husband and wife opened a joint brokerage account with Wells Fargo. A Wells Fargo stockbroker serviced the joint account. The marital bliss ends and the couple goes splitsville. The husband asks the Wells Fargo stockbroker to serve as an expert witness in the divorce proceedings.We only know most of the above paragraph of facts from the brief, very brief, painfully brief, presentation of facts in the FINRA Arbitration Decision. Could be that much of what the FINRA Arbitrator relayed to us was what was alleged by the Claimant ex-wife. Could also be that there just wasn't all that much presented by the parties beyond what the Decision tells us. Regardless of what he said or she said during the arbitration, we are left wondering -- or at least I was left wondering -- as to just why Respondent Napier accepted the offer to serve as the husband's expert witness regarding the joint account.I would think that most industry lawyers (of which I am one) would not be supportive of the prospect of a stockbroker who serviced a spousal joint account serving as or testifying as an expert witness against one of the spouses. On a strictly legal basis and as raised by Claimant Munn, there would likely be genuine and serious concerns about whether such witness services to one spouse would violate fiduciary obligations by the stockbroker. Pointedly, I am NOT saying that the answer to such a question would always be a "YES." Pointedly, what I am saying is that any time a stockbroker assists one joint tenant against another in a lawsuit, the legal dissection of potential liability for the stockbroker and the employer brokerage firm would begin by considering whether a fiduciary duty was and is owed to both spouses.Solely going by the verdict in this arbitration, we may infer that the FINRA Arbitrator did not find that Respondent Napier had a fiduciary duty to Claimant Munn or, in the alternative, even if such a fiduciary duty did exist, the arbitrator seems to have concluded that no violation of that duty occurred within the context of Napier's expert witness services to the husband. Regardless of the verdict in this arbitration, it strikes me as both a dubious proposition and a dangerous undertaking for a stockbroker servicing a spousal joint account to get embroiled as an expert witness in the couple's divorce proceedings. Could there be compelling reasons for such service? Sure. Could a stockbroker put before me certain facts and arguments that would persuade me to give the okay to the expert witness service? Possibly. After more than three decades as a securities-industry lawyer would I likely give my blessing to such a proposed expert witness service? No. I just don't think it's a smart idea for a stockbroker to accept a role as an expert witness pertaining to a serviced joint account. It may well be that there is a longer relationship or firmer bond between one joint-accountholder and the servicing stockbroker: maybe they are family; maybe they were friends going back to High School; maybe they were in the same military unit; maybe they are in a foursome at the local golf club. Under such circumstances, and as with most divorces, the couple and their friends and associates choose sides. That's how the marriage and the cookie crumble. Joint-accountholders and tenants-in-common likely have an expectation and desire to utilize a stockbroker who will not favor any other tenant. Once a stockbroker is seen as taking sides, that disclosure could have a chilling effect on future business, particularly if the branch office is in a relatively small community where word gets around. And if the stockbroker's assistance is seen as having tipped the scales in a divorce in favor of one spouse or the other and the outcome is unpopular in the branch's market, that too has negative consequences for business development and retention. Of course, if Respondent Napier had declined to serve as the husband's expert witness, it's possible that his business would have been exposed to similar negative consequences by the rebuffed husband. Sometimes, no matter what you choose, you lose. In conclusion, let's keep sight of a very important point: The FINRA Arbitrator dismissed all of Claimant Munn's claims and exonerated both Wells Fargo and stockbroker Napier. As far as this arbitration goes, the Respondents did nothing wrong. The lesson that I would teach from this case is that if a divorcing spouse in a joint account were to ask a stockbroker: Can I get a witness?, the answer should be a respectful but firm "No."