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Wells Fargo: There’s no secret FINRA agreement

Wells Fargo Advisors is appealing a Georgia judge’s decision that overturned the arbitration award originally awarded in her favor, alleging that her attorneys tried to exclude certain arbitrators from selection. Made a “secret settlement” with FINRA, “a baseless allegation.”

Fulton County Superior Court Judge Belinda Edwards gave her Jan. The decision to reverse the award in Brian Leggett and Bryson Holdings Vs. Wells Fargo participated in Leggett’s allegations that Wells Fargo attorney Terry Weiss had made an oral arrangement with the regulator to ensure multiple arbitrators, which he said stemmed from a decades-long dispute, never considered any case. will not be retained. in which he was involved.

But according to a Wells Fargo appeal filed on April 4, “evidence suggests otherwise,” Wirehouse’s lawyers note that FINRA denied the existence of such a settlement. Briefly originally reported by Barons.

“There is no evidence on record to the contrary,” the new brief read. “Parties follow FINRA regulations at every step.”

The conflict in the Wells case arose out of a separate decade-old dispute. Weiss was Merrill Lynch’s attorney in the mediation between the Wirehouse and Robert Postel assets. Nearing the conclusion, Weiss sought to distance himself from the arbitrators, accusing arbitrator Fred Pinckney and others of “bias” against Merrill Lynch.

After Merrill lost the case, Weiss sent a letter to FINRA complaining about the arbitrators, and filed a motion to vacate the award. In the motion, he cited a Bloomberg News report from 2012 accusing Pinckney of misconduct, in which Pinckney described Weiss as “exploding” as he accused him of bias.

Weiss’ motion to vacate the award failed, with a federal judge writing that he failed to prove Pinckney and the arbitrators “generally participated in or otherwise engaged in behavior that was clearly out of their authority.” were more” (the trio of arbitrators were briefly removed from the list by the FINRA arbitrators but were later reinstated according to another arbitrator on the Pinckney and Postel case, Daniel Kolber).

When Pinckney was randomized as a potential arbitrator in the Wells Fargo case, Weiss argued that FINRA should remove him. According to Leggett, Weiss wrote a letter to FINRA that there was an “oral agreement” between him and the self-regulatory organization that none of the three postal arbitrators would ever be considered in any case in which he was involved. Was.

Wells Fargo, Weiss and FINRA disputed this, but Edwards included this “secret agreement” as one of the reasons for reversing the prize originally awarded in Wells Fargo’s favor.

The agreement likely raised questions about the integrity of the arbitrator selection process, and in response, FINRA hired the law firm Lowenstein Sander to conduct an independent investigation. Additionally, Sen. Elizabeth Warren (D-Mass.) and Rep. Katie Porter (D-Calif.) presses FINRA CEO Robert Cook for more information in a series of recent letters.

In the appeal brief, Wells Fargo also argued that the Edwards decision went beyond the limits of the narrow limits of judicial review for arbitration decisions established in the Federal Arbitration Act (FAA); Overturning the award, Wells Fargo argued, “could defeat the legislative purpose of arbitration.”

“Simply put, the trial court’s decision removes all benefits of arbitration and has the effect of discouraging arbitration agreements—the exact opposite of what the FAA was intended to accomplish,” the appeal read.

Craig Kugler, a Ga-based attorney representing Leggett, did not respond to a request for comment as of press time. A Wells Fargo spokesperson reiterated the claim that they followed all FINRA rules and procedures for the arbitrator selection process in the case, and will continue to “strongly deny” the allegations in Edwards’ decision.

According to Michael Adamiston, a partner at the law firm Jonathan W. Evans & Associates and current president of the Public Investors Advocate Bar Association (PIABA), successful attempts to reverse an arbitration decision like what happened in the Wells Fargo case are rare. But that doesn’t mean Wells Fargo’s appeal is a slam dunk.

“You’re looking at a narrow funnel in terms of first reversing a prize, then emptying a prize,” he said. “The odds are getting smaller as the case progresses at each stage.”

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