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11. Wells Fargo Intuitive Investor

Regulation and Compliance > Litigation

Wells Fargo Wins Appeal in FINRA Arb Case

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What You Need to Know

  • A Georgia appeals court has reversed a January ruling that found Wells Fargo manipulated the FINRA arbitrator pool.
  • In its August decision, the appeals court said it found nothing to indicate manipulation on Wells Fargo's part.
  • PIABA President Michael Edmiston said that arbitrator selection is critical in every case.

A Georgia appeals court has reversed the decision by a judge issued in January that Wells Fargo and its counsel “manipulated” the Financial Industry Regulatory Authority’s arbitrator selection process.

Judge Belinda Edwards of the Georgia 5th Superior Court District Atlanta Circuit ruled earlier this year that Wells Fargo and its counsel “manipulated” FINRA’s arbitrator selection process and violated the FINRA Code of Arbitration Procedure, denying investors their contractual right to a neutral, computer-generated list of potential arbitrators.

But the appeals court stated in its Aug. 2 decision: “Nothing indicates that Wells Fargo manipulated the arbitrator pool.”

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 Wells Fargo brokers. 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.

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 Services, according to Edwards.

FINRA announced on Feb. 18 that it was seeking an independent review of the ruling.

Wells Fargo said on Feb. 25 that it was appealing Edwards’ ruling.

Michael Edmiston, president of the Public Investors Advocate Bar Association, or PIABA, told ThinkAdvisor on Tuesday in an email that the appeals court’s decision ”is a reality of the great deference courts are required to give arbitration awards under the Federal Arbitration Act.”

In Leggett vs. Wells Fargo, “the initial issues of arbitrator selection influenced the perception, if not reality, of whether there was a fair hearing. The trial court found it was unfair but the appellate court disagreed.”

Arbitrator selection, Edmiston added, “is critically important in every case. Arbitrators’ broad discretion in controlling the case coupled with their charge to do equity rather than follow the law is why PIABA continues to advocate for additional transparency in the arbitrator appointment process.”


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