Securities Industry Commentator by Bill Singer Esq

WASHINGTON, DC - The Financial Industry Regulatory Authority (FINRA) has asked former Wells Fargo bank employees whose securities registrations were terminated to contact FINRA if they have concerns about the notice filed by Wells Fargo regarding their termination.  Recent news reports have highlighted several former Wells Fargo bank employees who believe that they were terminated from the bank for reporting or refusing to engage in allegedly fraudulent account-opening activities. Further, the reports indicate that a subset of these individuals who were also registered with FINRA to conduct securities activities have raised concerns that they did not receive a copy of their Form U5 termination notice within 30 days of being terminated as required by FINRA rules, or that their Form U5 contained inaccurate or incomplete comments related to the reason for the termination.

FINRA wants to review the facts and circumstances surrounding these allegations and has created a dedicated phone line and email address for use by former registered Wells Fargo bank employees to report instances where they believe there are material issues associated with the processing of their Form U5, including the accuracy and completeness of the language filed by Wells Fargo Advisors describing the reason for termination.  Qualifying former Wells Fargo employees can contact FINRA at (800) 334-0668 or U5review@finra.org. The dedicated phone line and e-mail address will be available for the next 90 days.  Phone calls will be answered between 9 a.m. - 5 p.m. EST Monday through Friday; calls received outside of those hours will be returned. . .

WASHINGTON - The Financial Industry Regulatory Authority (FINRA) announced today that it has ordered Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC to pay more than $3.4 million in restitution to affected customers for unsuitable recommendations of volatility-linked exchange-traded products (ETPs) and related supervisory failures. FINRA found that between July 1, 2010, and May 1, 2012, certain Wells Fargo registered representatives recommended volatility-linked ETPs without fully understanding their risks and features. . .

This matter is before the Court due to the lapse of congressional appropriations funding the federal government, including the Department of Justice and the United States Attorney's Office for the District of New Jersey (the "United States Attorney's Office"). Absent an appropriation, the United States represents that certain Department of Justice attorneys and employees of the federal government are prohibited from working, even on a voluntary basis, except in very limited circumstances. including "emergencies involving the safety of human life or the protection of property." 31 U.S.C. § 1342. Therefore. the lapse in appropriations requires a reduction in the workforce of the United States Attorney's Office and other federal agencies, particularly with respect to prosecution and defense of civil cases. The Court, in response, and with the intent to avoid any default or prejudice to the United States or other civil litigants occasioned by the lapse in funding, enters this Order. As a result of the cited workforce reductions, it is hereby

ORDERED effective December 27, 2018 at all civil litigation, with the exception of Federal Trade Comnission v. Gerber, Civil Action No. 14-6771(SRC) and all pending Social Security cases, in the United States District Court for the District of New Jersey involving as a party the United States of America. its agencies. its officers or employees (whether in their individual or official capacity and whether current or former employees), and/or any other party represented by the Department of Justice or the United States Attorney's Office is immediately suspended. postponed and held in abeyance continuing either (1) until the federal government is funded through congressional appropriation or (2) for a period of thirty (30) days from the date of entry of this Order, whichever comes sooner. The Court may renew or modify this Order depending on developments during the stay period. The Court intends "civil litigation" to include all pending non-criminal cases in which the United States, its agencies, its officers or employees (whether in their individual or official capacity and whether current or former employees) is in any way a named party and any non-criminal cases in which the United States Attorney's Office or the Department of Justice is counsel of record. This Order includes, without further limitation, all other cases seeking monetary or equitable relief in which the United States is involved as a civil litigant. 

This Order suspends and continues, during the stay, any and all events and deadlines in the affected civil litigation (whether established b order. rule. or agreement), including but not limited to am' scheduled proceedings, hearings. discovers' and pleading dates, and/or compliance and administration of consent orders. No party will be required to take any steps in civil litigation affected until expiration of the stay. The Court warns litigants that this Order does not purport to affect rights to or deadlines concerning appeal from any decision of this Court. which will continue to operate and issue orders in the normal course. 

Any litigant affected by this Order may seek relief from the Order by motion. The Court may. in any particular case. vary the effect or operation of this Order by a separate ruling.. .

The customer in the underlying matter alleged that Claimant failed to execute his instructions to sell assets in his account. In arriving at a decision, the Arbitrator relied on Claimant's testimony at the hearing that the customer refused to verbally instruct Claimant to sell his assets despite being advised to do so by the Claimant on multiple occasions. As reported in Claimant's BrokerCheck report, the customer had sent emails to Claimant regarding the liquidation of the assets but the report notes that the emails could not be accepted as orders by the firm. Claimant testified that in follow up phone conversations he had specifically asked if the customer wanted to sell the assets and the customer declined to authorize the sale. The Arbitrator finds the accusation to be false and recommends expungement.

. . .

The customer in the underlying matter alleged that Claimant engaged in unauthorized and self-serving trading in her account. In arriving at his decision, the Arbitrator relied on Claimant's testimony at the hearing that the customer was fully aware of and authorized the trades. Although he did not submit these to the Arbitrator, Claimant testified that the customer was sent a written confirmation of the trade and was also provided with monthly statements showing that the investment was earning dividends during the roughly one-year period following the transaction. The Arbitrator finds the accusation to be false and recommends expungement. 

non-party REJ Properties, Inc. d/b/a Walters, Meyer, Trosclair & Associates' ("Company") unwritten compensation agreement and payment method of commissions violated SEC and FINRA regulations; Claimant was fired in retaliation for reporting the Individual Respondents' conduct to Ameriprise in violation of Louisiana Law; non-party Company tortiously interfered with Claimant's employment agreement; and Claimant's employment agreement's non-compete and non-solicitation provisions are invalid and non-party Company tortiously interfered with Claimant's book of business after wrongful termination in violation of Louisiana's Unfair Trade Practices & Consumer Protection Law ("LUPTA"). In Claimant's Second Amended and Restated Statement of Claim, she added as a cause of action that Ameriprise was a joint employer and is jointly and severally liable for the actions of the Individual Respondents and non-party Company. The causes of action relate to Claimant's allegations that she was involuntarily terminated from her employment with non-party Company, a franchise of Ameriprise. 

On November 20, 2018, the Panel and the Individual Respondents held a recorded in person conference to hear the parties' oral argument on the Individual Respondents' motions to dismiss. The Individual Respondents argued that Claimant's theories of recovery were legally and/or factually without merit. Claimant opposed the motions to dismiss. After due deliberation, the Panel granted the Individual Respondents' motions to dismiss and found that Claimant did not: 1) establish liability for the Individual Respondents under the Louisiana Whistleblower Act; 2) prove a tortious interference with contract claim against the Individual Respondents; and 3) prove any claim against the Individual Respondents under the Louisiana Unfair Trade Practice Act or establish any other basis for recovery under the Amended and Restated Statement of Claim. 

Both customer complaints were "automatic" reactions to a declining market, which corrected itself. This was in spite of accurate assessments of risk tolerance and balanced investment portfolios, as well as full disclosure of markets and risks. In occurrence number 1666265, Mr. D acknowledged his mistake and remained with the broker and J.P. Morgan, with no settlement or actual damages claimed. In occurrence number 1865738, Ms. Z left the broker-dealer without further claims and was given a refund of fees, to which the broker did not contribute. J.P. Morgan's reporting to CRD was required but does not represent an accurate representation of the broker.

• Securities Industry Commentator
• Bill Singer