An irreverent Wall Street Blog
by Bill Singer
by Bill Singer
Wells Fargo Wins FINRA Hostile Work Environment Promissory Note Arbitration
April 29, 2013
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in March 2011, and as amended thereafter, Claimant Wells Fargo Advisors, LLC asserted
- breach of contract;
- unjust enrichment;
- conversion; and
- breach of fiduciary duty
in connection with Respondent Farr's employment. Claimant sought $203,213.53 in compensatory damages, punitive damages, costs, attorneys' fees, and pre-judgment interest. In the Matter of the FINRA Arbitration Between Wells Fargo Advisors, LLC, Claimant, vs. Douglas T. Farr, Respondent (FINRA Arbitration 11-00908, April 25, 2013).
Respondent Farr generally denied the allegations, asserted various affirmative defenses, and asserted a Counterclaim, which alleged:
- misrepresentation;
- change of pay grid;
- alienation; and
- hostile work environment.
In his Counterclaim, in addition to punitive damages, interest, attorneys' fees, fees, and costs, Respondent Farr sought at least:
- $35,000 for loss of assets;
- $100,000 for lost income;
- $100,000 for loss of future business earnings, and
- $350,000 for loss of income and bonuses.
Award
The FINRA Arbitration dismissed with prejudice Respondent's Counterclaim; and found Respondent Farr liable and ordered him to pay to Claimant Wells Fargo:
- $199,777.13 in compensatory damages:
- $34,114.16 pre-judgment interest at the rate of 7.35% from October 20, 2010, through April 16, 2013;
- $75,000.00 in attorneys' fees; and
- $21,718.47 in costs.
Bill Singer's Comment
Not a particularly complicated case but one that I offer to show the various causes of action asserted in defense of these promissory note / Employee Forgivable Loan ("EFL") disputes. Registered representatives may nod a knowing head when they read about such complaints as changed pay-out girds and hostile work environments.
Notwithstanding, RRs should also note that the $203,000 in damages sought by Claimant Wells Fargo ultimately mushroomed into about $331,000 in total damages, interest, fees, and costs -- about a 63% premium to Respondent Farr as the cost of trying the case. Moreover, Respondent likely incurred considerable attorneys' fee, costs, and expenses of his own in taking the dispute to verdict.
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