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Regulation and Compliance > Federal Regulation > FINRA

Client, 1; Wells Fargo, 0: Wirehouse Loses in Nevada Fiduciary Case

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Investor Ann De Jong of Las Vegas told her Wells Fargo advisors that she didn’t want to gamble with her savings and instead wanted them invested conservatively.

When she lost about $41,000, or 6%, of the portfolio due to some equity positions, the emergency-room physician filed a complaint with the Financial Industry Regulatory Authority.

The FINRA panel ruled in late August that Wells Fargo must pay her back — in a decision that seems to be the first case of a client citing Nevada’s new fiduciary rule in her complaint, according to a report in Friday’s Wall Street Journal. The rule has yet to be finalized.

“It was my life savings. It was a nightmare,” De Jong told the paper.

Her FINRA award included compensatory damages of $40,851.40 plus interest and costs of $600. And it came about nine months after it was filed.

In response, a Wells Fargo spokeswoman said in a statement: “The company is disappointed with the results of this matter. As is consistent with FINRA arbitration awards, the award does not provide a basis for its conclusion.”

More Details

De Jong received legal advice from a law clinic at the University of Nevada, Las Vegas, which is led by professor Benjamin Edwards.

Her complaint asserted the following causes for action: “breach of fiduciary duty; negligence; failure to supervise; fraudulent misrepresentation and omissions; and violations of Nevada’s state securities law.”

Nevada’s Legislature passed a fiduciary statute for securities in 2017, but the law cannot be implemented until final regulations are put into place.

The state issued those proposed regs on Jan. 18, with a comment period that expired on March 1. Nevada is expected to hold a hearing on its fiduciary plan in the near future and has to provide notice 30 days before the hearing.

“Our view was that the statute alone was enough for a private claimant to bring a claim on already — even if the regulations which will help define the scope of the term have not yet been implemented,” Edwards said in an email to ThinkAdvisor.

The advisors named in the arbitration decision are Robert Glenn Kaiser, whose request to have the matter removed from his regulatory record was denied by the FINRA panel, and Daniel Andrew Rosengarten, who did not pursue an expungement request. They have 19 and four years, respectively, in the business, according to FINRA BrokerCheck.


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