Wachovia Whacks Former Broker in Promissory Note Case

December 16, 2010

Things fell apart between Wachovia Securities, LLC and its former employee Telum Jakey Winters. Now that's an understatement.

In a FINRA Arbitration Statement of Claim filed in January 2009, Claimant Wachovia sought $411,257.24, representing the principal balance due and owing under the terms of a Promissory Note executed in November 2005 with Respondent Winters. Claimant  Wachovia also sought accruing interest, costs of collection, attorneys' fees, and, any additional relief deemed just and equitable by the Panel. For his part, Respondent Winters denied the allegations and asserted various affirmative defenses.  In the Matter of the Arbitration Between Wachovia Securities. LLC, Claimant ,v. Telum Jakey Winters, Respondent (FINRA Arbitration Case Number: 09-00249, December 6, 2010). 

Going It Alone

Respondent Winters appeared prepared to fully contest the claims when he hired a lawyer, but by July 22, 2010, the lawyer was no longer in the picture. From that date, Winters represented himself. Hey, I get it.  Seriously. Lawyers are expensive -- often very, very expensive. Nonetheless, whatever the reasons for proceeding pro se, Winters found himself in a world of hurt.

Failing to Comply

On October 25, 2010, Claimant Wachovia filed a Motion for Sanctions asking that the FINRA Arbitration Panel sanction Respondent Winters for his failure to comply with the Panel's August 3, 2010 Order to produce documents responsive to Claimant's first and second requests for production. In response, Respondent stated that he was in the process of obtaining counsel to assist with the procedures to comply with the Panel's Order.

Apparently, by November 18, 2010, Respondent had not yet complied with the Panel's production order, and the Panel issued another Order directing Winters to produce the documents at issue to Claimant no later than 2:00 p.m. on November 26, 2010. This was not an idle threat. The Panel warned that Winters' failure to timely comply would result in a $10,000.00 fine.

On the morning of the first day of the evidentiary hearing, Respondent sent an email notice that he would be unable to attend the scheduled hearing. Respondent was informed that the hearing would proceed without him, and he was admonished that he would be bound by the Panel's determinations. At the evidentiary hearing, Claimant informed the Panel that Respondent had not produced documents as ordered or paid the $10,000.00 fine. 

The Decision

The Panel found Respondent Winters liable and ordered him to pay to Claimant Wachovia: 

  • $411,257.24 in compensatory damages;
  • $63,057.78 in interest accrued from the date of Respondent's October 17, 2008, departure through December 1, 2010;
  • $20,000.00. representing reimbursable attorneys' fees; and 
  • $10,000.00 as a sanction for Respondent's failure to comply with the terms of the Panel's November 18. 2010 Order.