(Updated in last paragraph to correct customer assets of Bison Financial Group.)
Leaders of an eight-office team of independent brokers pushed out by Wells Fargo Advisors Financial Network (FiNet) in 2017 can clear their regulatory records of allegations that they left after accusations of annuity sales double-dipping, an arbitration panel ruled.
In an unusually specific directive, three Financial Industry Regulatory Authority arbitrators wrote in a decision published Wednesday that the advisors at Indiana-based Bison Financial Group should change their regulatory dismissal forms to say they were “disaffiliated as a result of fabricatory investigatory findings” by FiNet.
“It’s not a joyful day, but we’re satisfied because it’s the right thing,” said David Vorbeck, the CEO of the 18-advisor Bison group, which now operates as a “franchise” of Ameriprise Financial, with offices in Indiana, Michigan, Ohio and Florida.
The Indianapolis-based arbitrators also recommended that Vorbeck and colleagues Stephen Dunnuck and Stephen Wien uncheck a box on their U4 and U5 separation forms that say they resigned after being accused of violating investment laws, regulations, rules or standards of conduct. They were also directed to change the reason for their terminations to “voluntary” from “permitted to resign.”
Wells Fargo fired them in June 2017 after nine years, alleging that they submitted and funded annuity replacement contracts in an apparent attempt to collect higher commissions.
“We have no additional information to add,” Wells Fargo spokeswoman Shea Leordeanu said about the arbitration award.
Michael Taafe, a Florida-based lawyer who represents both firms and advisers in employment disputes, said attempts to clean up allegedly defamatory language that firms put on U5 separation forms are becoming more common.
“But arbitrators don’t go so far as to talk about ‘fabricated’ investigations,” said Taafe, who has represented Ameriprise but was not involved in the expungement arguments. “This calls out someone in compliance as having made up the allegations.”
In their complaint filed in May 2018, the brokers alleged that the firm marked up their U5 forms with false and defamatory language “in an attempt to gain a litigation and competitive advantage” against them.
They also sought at least $8.6 million in compensatory damages and punitive damages. The arbitrators did not comment on the brokers’ allegations, and did not rule on the monetary claims because the parties reached a settlement in November, according to the award decision.
Stephanie McLaughlin, a partner at Eccleston Law in Chicago who represented the brokers, said the monetary claims were resolved “to all parties’ satisfaction.”
She declined to comment further, other than to say that the arbitrators’ expungement explanation “stands out in terms of the length they went to in their comments” about FiNet’s investigatory findings.
Despite losing some team members, Bison Financial’s customer assets have risen to $755 million from $437 million when the group left FiNet two-and-a-half years ago with 15 of its 21 advisors, Vorbeck said. The team now includes 18 advisors.
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