Wells Fargo and its counsel were found to have manipulated the FINRA arbitration process, according to a Georgia state court, which in January, 2022 vacated an arbitration award in favor of Wells Fargo. The Public Investors Advocate Bar Association (PIABA) and its president called for an investigation by the SEC as well as Congressional hearings.
FINRA Dispute Resolution
Investors who have disputes with their FINRA-registered broker-dealers are required to use FINRA’s Dispute Resolution forum. Disputes are resolved through non-judicial arbitration and mediation proceedings.
Investors frequently bring FINRA arbitration claims after losing money with investments sold to them by their broker-dealer, claiming the investments were unsuitable, that adequate due diligence wasn’t preformed, or other causes. Arbitration is typically faster and less expensive than court.
If an investor’s claim can’t be settled by the parties, it will go before an arbitration panel composed of one to three neutral arbitrators chosen by the parties. The arbitrators will examine all evidence, read the pleadings filed, listen to arguments, and make a decision. Arbitrators can award Claimants (investors) money that the Respondent (broker) must pay.
The arbitration panel’s decision, or award, is final and binding and rarely overturned.
To appoint arbitrators, FINRA has a Neutral List Selection System Process, which randomly selects a pool of arbitrators in a computer-generated list. The parties then strike and rank the arbitrators to select the panel. The system was implemented in 1998. Before that, FINRA staff controlled the process.
The order from the Georgia court says that Wells Fargo and its attorney manipulated the arbitrator selection process and rigged the arbitrator pool in their favor.
Fulton Superior Court Judge Belinda E. Edwards wrote that “Wells Fargo and its counsel manipulated the arbitrator selection process”, and criticized FINRA Dispute Resolution for allowing misconduct by Wells Fargo and its counsel.
The order accuses Wells Fargo and its attorney of having an agreement with FINRA to remove some arbitrators from the list given to them. “(P)ermitting one lawyer to secretly red line the neutral list makes the list anything but neutral, and calls into question the entire fairness of the arbitral forum,” Judge Edwards wrote.
“Of immediate concern to PIABA is the apparent corruption of the arbitrator selection process. The Court found Wells Fargo and its counsel manipulated the arbitration process to deny Claimants their right to a neutral arbitration panel,” PIABA president Michael S. Edmiston said in a statement.
Contact Silver Law Group For FINRA Arbitration
Silver Law Group is a nationally-recognized law firm with experience representing investors in FINRA arbitration and investment fraud cases. Scott Silver, Silver Law Group’s managing partner, is the chairman of the Securities and Financial Fraud Group of the American Association of Justice.
Our attorneys are admitted to practice in New York and Florida and represent investors nationwide. Most cases are handled on a contingency fee basis, so nothing is owed unless we recover your money for you. Contact Silver Law Group for a no-cost, confidential consultation at (800) 975-4345 or by email at email@example.com.