The little guy takes on the heavyweight employer and goes the distance for the win

This is a short and sweet write-up about a fairly innocuous Financial Industry Regulatory Authority ("FINRA") intra-industry arbitration.  The essential facts are that Wells Fargo Advisors, LLC. filed a FINRA ArbitrationStatement of Claim in November 2011 against Kenneth Ray Koger. Wells Fargo alleged that Koger had violated the contractual terms of his Supplementary Training Agreement for a Financial Consultant and sought $25,000 in compensatory damages, interest, attorneys' fee, and costs. In the Matter of the FINRA Arbitration Between Wells Fargo Advisors, LLC, Claimant, vs. Kenneth Ray Koger, Respondent (FINRA Arbitration 11-04341,  April 24, 2012).

Claimant Wells Fargo was fully lawyered-up for this arbitration through an outside law firm.  Respondent Koger represented himself.

DECISION

Arbitrator Awards Less Than 20% Of Trainee Fees to Wells FargoBill SingerContributor

Wells Fargo Advisors Wins Trainee Fees Arbitration For $25,000Bill SingerContributor

A.G. Edwards Loses Training Fee Case to Pro Se StockbrokerBill SingerContributor

Merrill Lynch Trainee Doctors Failed Scores And Tests FINRA's PatienceBill SingerContributor

The sole FINRA Arbitrator hearing this case denied Claimant Wells Fargo's claims in their entirety.

Bill Singer's Comment

Like I said: short and sweet.

My antipathy for the collection of Trainee Fees (in most cases) is a matter of published record. As I recently stated in Wells Fargo Advisors Wins Trainee Fees Arbitration For $25,000 (Trainee loses case) (February 24, 2012):

For the record, I hate, I detest, and I despise not only Trainee Fees but the very concept of a brokerage firm being able to recoup a portion of its cost in preparing trainees to become registered.  It strikes me as having the same compelling rationale as McDonald's suing to recoup its Hamburger University training fees if a graduate of their program jumps ship for Wendy's or Burger King. Frankly, I'm almost positive that an individual seeking a career in restaurant management obtains far more of value from McDonald's Hamburger University than most Wall Street trainees obtain from their so-called in-house training. I trust my feelings on this subject are clear?

Admittedly, there may be appropriate circumstances of gross bad faith by the trainee in which reimbursement of the reasonable value of the training may be fair.  In such circumstances, I would not be adverse to awarding the reasonable value of the training but rarely, if ever, the liquidated damages sought by the former employer. In most of these cases, the former brokerage employer is seeking to recoup Trainee Fees that exceed the cost of a year's worth of Ivy League college.  And for what?  Learning how to push house product?  Learning how to overcome a customer's objections?  And, puhlease, don't start with me - I used to have a Series 7 and a Series 63 and I'm a 30-year industry veteran. It's quite common for trainees to be "charged" $75,000 for this education.  You really think that working for the likes of Merrill Lynch or Morgan Stanley Smith Barney should come with such a price tag?  I know all too well what is taught during these training programs and the reasonable value of such a dubious education.

As such, I make no pretense here and clearly admit my bias.  Frankly, I'm thrilled for Respondent Koger.

Read these "Street Sweeper" columns:

Arbitrator Awards Less Than 20% Of Trainee Fees to Wells Fargo (October 13, 2011)

A.G. Edwards Loses Training Fee Case to Pro Se Stockbroker (September 22, 2011)