In a Financial Industry Regulatory Authority Arbitration Statement of Claim filed in April 2011, Claimant Wells Fargo Advisors asserted that its former registered representative Respondent Fisher had failed to repay the balance due on his promissory note upon his termination from employment. Ultimately, Claimant sought
In the Matter of the FINRA Arbitration Between Wells Fargo Advisors, LLC,Claimant/Counter-Respondent, vs. Randall A. Fisher, Respondent/Counter-Claimant (FINRA Arbitration 11-01681, August 27, 2012).
SIDE BAR: According to online FINRA records as of August 29, 2012, Respondent Fisher was employed at A. G. Edwards & Sons, Inc. from 1999 through January 2008, and thereafter with Claimant Wells Fargo Advisors. In October 2007, Wachovia Corporation acquired A.G. Edwards, Inc. In 2008, A.G. Edwards & Sons, Inc., became a part of Wachovia Securities, LLC. Towards the end of 2008, Wells Fargo & Company acquired Wachovia. The online records indicate that Respondent Fisher's registration with Wells Fargo was terminated in October 2009.
Why the FINRA Arbitration Decision didn't provide this information is somewhat inexplicable as we lack meaningful context to fully understand this case - I mean, c'mon, at a minimum at least tell us the date of the Respondent's termination. It would also have been helpful to learn of the date of the execution of the promissory note at issue and, if different, the date of the operable retention agreement.
Respondent Fisher generally denied the allegations, asserted affirmative defenses, and filed a Counter-Claim in which he alleged that he had been constructively discharged in breach of contract - apparently this dispute involved a retention bonus. Pointedly, Respondent alleged that Claimant's company policies compelled his resignation. Ultimately, Respondent sought:
SIDE BAR: According to the FINRA ArbitrationDecision, at the conclusion of the hearing, the Counter-Claim appears to have asked for a range of compensatory damages and the "approximate" fees and costs noted. It is unclear whether this was how the claims were presented by Respondent's counsel or if the circumstances were inferred by the arbitrators.
I'm not a fan of seeking ranges or approximate monetary awards. Seems to me that by the time you sidle up to the bar you should sort of know what drink you're going to order. On the other hand, there are times when damages, fees, and costs may be an open issue subject to determination at a latter date. Unfortunately, when ranges are presented to arbitrators, human nature being what it is, there is a tendency to assume that the lower-end is more likely the more accurate.
Then there's the psychological impact of offering a range or "roughly" damages - all of which often conflates into alternative choices for the arbitrators. Imagine that I'm defending an accused murderer and in my closing to the jury I say that my client is absolutely innocent of the charges and wasn't even within 100 miles of the victim, BUT if you do find that my client fired the bullet that killed the victim, then it was self defense. Okay, sure, you can technically argue "in the alternative," but I"m not sure that most reasonable folks will buy what you're selling. Sometimes you just have to stake our your claim, stand your ground, and go with what you got.
The FINRA Arbitration Panel found Respondent Fisher liable to and ordered him to pay to Claimant Wells Fargo the net sum of $48,172.61. The Panel derived that net sum as follows:
Respondent owes to Claimant:
Claimant owes to Respondent:
Another apparent Retention Bonus case and another big question as to just what the hell Wells Fargo was thinking when it filed this arbitration against Fisher. The firm sought about $750,000 from Respondent Fisher and when all was said in done, walked away with a tad more than 6% of the damages it demanded. If this was another attempt to "send a message" to future registered reps contemplating jumping ship, this missive got returned to sender. Respondent Fisher and his lawyer seem to have gotten the upper hand.
Readers of "Street Sweeper" know that I'm not a fan of brokerage firmsroutinely suing their former employees for disputed forgivable loan or retention balances. Playing the tough guy has merits and can send the proverbial message, but large brokerage firms typically face the dynamic that they are expected to win all of these disputes and can't afford to lose one. Firms that adopt scorch-the-Earth policies against former employees, create reputations for being vindictive, which may discourage veteran brokers from joining the firm because they fear similar retaliation if they plan to move. I mean, seriously, do you think that a senior broker with a significant book of business is going to be attracted to a potential broker-dealer with a reputation for going hammer and tong after departing employees?
Similarly, when firms get sued by customers, former employees and managers are needed to testify in support of the company. There's nothing like filing a FINRA arbitration against your former brokers and branch manager to ensure that they become hostile witnesses whose testimony can be devastating to the defense of the firm. It's not unheard of for a former employee's anger over the demanded repayment of a $20,000 forgivable loan to motivate damaging testimony that tips the balance of arbitrators on a panel in a six- or seven-figure customer complaint arbitration.
There is an enormous toll upon firms such as Merrill Lynch, Wells Fargo, Morgan Stanley Smith Barney, JP Morgan, and UBS to maintain the credibility of a threat to sue every former employee unless a demanded settlement is forthcoming; ultimately, you create a monster that must continue to win every contested case. That's simply not a reasonable expectation. It's that one loss out of one hundred cases that becomes the hot topic around the water coolers, the popular attached file in thousands of emails, and a published article such as this. The legacy of a single loss easily overwhelms one hundred victories.
FINRA Arbitrators Wrestle With Considerable Confusion In Wells Fargo Employment Case
Former Wachovia Employee Files $1.3 Million Forgivable Loan Arbitration Claim Against Firm
Wells Fargo and Former Employee Go Toe To Toe Over Promissory Note and Deferred Compensation