Wells Fargo / Wachovia awarded promissory note balance, overpaid commissions, and trade errors

July 29, 2010

In a Statement of Claim filed on July 23,2009. Claimant Wells Fargo Advisors, LLC f/k/a Wachovia Securities, LLC alleged that Respondent William G. Adelsberger

  1. failed to repay sums allegedly due Claimant pursuant to the terms of a fully executed promissory note dated June 15, 2007 (the "Note"),
  2. owed repayment of overpaid commission fees from Claimant; and
  3. owed repayment of payments made by Claimant to settle Customer Complaints #1, #2, #3 and #4, which involved Respondents' trading errors. 

Claimant requested:

  • outstanding principal due on the Note in the amount of $52,500.00, plus Interest on the principal amount at the annual percentage rate of 8.25% that has accrued since August 22, 2008 until paid in full;
  • damages from overpaid commissions in the amount of $5,474.01, plus interest at the applicable judgment rate from August 22,2008 until paid full;
  • damages with applicable interest until paid in full resulting from Respondent's trade errors in the amount of
    • Complaint #1: $  4,444.98
    • Complaint #2: $  9,119.63
    • Complaint #3: $11,498.80
    • Complaint #4: $  3,934.72;
  • attomeys' fees, arbitration costs, and such other relief to which Claimant is entitled.

In the Matter of the Arbitration Between Wells Fargo Advisors, LLC, f/k/a Wachovia Securities, LLC, Claimant, vs. William G. Adelsberger, Respondent (FINRA Arbitration  09-04418, July 9, 2010).

Respondent Adelsberger did not file a Statement of Answer.

Claimant filed a Motion for Default or. in the alternative, a Motion to Preclude and for Sanctions citing the fact that Respondent did not file a responsive pleading as required by the FINRA Arbitration Code. Respondent did not file a response to the motions.

On or about June 17, 2010, the Arbitrator issued an Order that granted Claimant's motion as follows:

  • outstanding principal due on the Note in the amount of $52,500.00, plus Interest on the principal amount at the annual percentage rate of 8.25% that has accrued since August 22, 2008 until paid in full;
  • damages from overpaid commlssions in the amount of $5,474.01, plus interest at the prevailing legal state rate where the award was rendered, from August 22.2008 until paid in full;
  • damages plus applicable interest until paid in full for the trade errors cited in Complaints #1, #2, #3, and #4 in the amounts of $4,444.98, $9,119.63, $11,498.80, and $3,934.72; and
  • Any and all relief not specifically addressed herein, including Claimant's request for attorneys' fees, is denied.

Bill Singer's Comment: There is a timeless question from registered representatives: What's the worst that could happen to me if I just turned my back on the whole mess and simply walked away? 

The damages awarded in this case provides a stark answer.  However, the RR's exposure doesn't simply end with the award of damages -- just over the horizon could be a bar from the industry for non-payment of the Award, collection efforts, court-ordered judgments/liens/garnishments, and bankruptcy, etc.

Also, another oft-asked question by RRs is What happens if I screw up a few trades -- can they really come after me? 

While the answer to that question may well have been somewhat different if Respondent Adelsberger had put in an appearance at the arbitration, the Panel's award of nearly $30,000 in damages plus interest as compensation for trading errors sort of spells out your liability.