Wells Fargo Appeals Arb Ruling Struck Down in Court

What You Need to Know

A judge threw out an arb decision that favored the bank after finding that Wells Fargo had manipulated the arbitration process.
The court didn’t have the authority to do so, Wells Fargo is arguing.
The findings in the judge’s order “are false and wholly unsupported by the record,” Wells Fargo Advisors states.

A Georgia judge erred in ruling that Wells Fargo manipulated the Financial Industry Regulatory Authority’s arbitration selection process and the decision should be reversed, according to an appeal filed by Wells Fargo Advisors.

Atlanta Superior Court Judge Belinda Edwards’ Jan. 25 order centered on a 2017 FINRA dispute filed by Wells Fargo Advisors’ client Brian Leggett over more than $1.1 million in losses that he said he incurred at the hands of a Wells Fargo broker. In 2019, an arbitration panel denied Leggett’s claim.

In 2021, Leggett asked the Georgia court to vacate the Wells Fargo award while Wells Fargo asked the court to confirm it.

On Jan. 25, Edwards vacated the FINRA arbitration decision, finding that Wells Fargo and its counsel manipulated the arbitration process. The manipulation was accomplished with the help of FINRA Dispute Resolution, according to Edwards.

In its April 4 complaint, filed in the Georgia Court of Appeals, Wells Fargo Advisors argues that the trial court “vacated the Award notwithstanding that the factual findings in its Order are false and wholly unsupported by the record. If this Court does not reverse, the trial court will have effectively deprived WFA of the benefit of the written contractual bargain that it had struck with Leggett.”

Michael Edmiston, an attorney with Jonathan Evans & Associates, told ThinkAdvisor in an email message Monday that “every argument [in the Wells Fargo appeal] is the ‘trial court exceeded its authority in vacating the award.’ This is the only avenue open to Wells Fargo to challenge the decision.”

Wells Fargo’s “argument that Leggett did not challenge the replacement arbitrators for cause is a red herring,” said Edmiston, president of the Public Investors Advocate Bar Association, or PIABA, a group of lawyers who represent investors in disputes with the securities industry.

“Leggett lost arbitrators that he wanted on the strike list and panel,” Edmiston continued. “The fact that the replacement arbitrators did not have conflicts that would support a successful causal challenge is not proof FINRA’s appointment system was misused by Wells Fargo and FINRA.”