A Financial Industry Regulatory Authority arbitration panel ordered an ex-Wells Fargo broker who is serving five years in prison for securities fraud to pay the firm $3 million in compensatory damages.
According to a FINRA arbitration award document posted on the industry self-regulator’s website Monday, Wells Fargo Advisors Financial Network filed a claim in August 2019, saying ex-rep John Gregory Schmidt misappropriated customer funds while he was with the company. The firm also accused him of breaching a license agreement.
Wells Fargo requested $3 million in compensatory damages; fees, costs and expenses; and “such other relief as may be deemed just and proper.” The three-person FINRA arb panel ruled Schmidt was liable and must pay the firm $3 million in compensatory damages, but denied other relief.
Asked for comment on the award, Wells Fargo said Wednesday it had “nothing to add.”
Schmidt was with Wells Fargo from 2006 to 2017, according to his report on FINRA’s BrokerCheck website. In October 2017, the firm “disaffiliated with Mr. Schmidt after allegations of unauthorized money movement between clients, and after the Firm was notified of an allegation of the existence of inaccurate account statements which appear not to have been generated or approved by” Wells Fargo, according to a disclosure — one of 13 — on his report.
FINRA and the Securities Exchange Commission barred Schmidt from the industry.