Arbitration Panel finds that Wells Fargo Advisors, LLC ("Wells Fargo") Liable for Securities Fraud and Common Law Fraud and Assesses $100,000 in Punitive Damages against Wells Fargo
Goodman & Nekvasil, P.A. Law Office Announces a $360,800 FINRA Arbitration Award against Wells Fargo
Goodman & Nekvasil, P.A., announces they have won a $360,800 FINRA arbitration award against Wells Fargo Advisors Financial Network, LLC ("Wells Fargo") on behalf of Kathryn A. Schmierer, f/k/a Kathryn A. Pearson ("Schmierer"), formerly a resident of Fargo, North Dakota.
Ms. Schmierer alleged that in 2011 and 2012, Raymond Kvalvog ("Kvalvog"), then the branch manager for Wells Fargo's Fargo, North Dakota branch office, recommended that she invest a significant amount of her net worth in "junk bonds". Ms. Schmierer, a 67 year old unemployed divorcee, alleged that these recommendations were unsuitable for her because Kvalvog knew that she was living on the income from her Wells Fargo account, virtually all of her savings were in her Wells Fargo account, and Ms. Schmierer could not afford to risk these monies.
Ms. Schmierer also alleged that Kvalvog misrepresented these junk bonds as safe investments, failed to disclose the risks involved in these investments, and that Kvalvog did not himself understand these investments. Ms. Schmierer sought compensatory damages of $172,000.
The arbitration panel found Wells Fargo liable for securities fraud and common law fraud and also found evidence of breach of fiduciary duty and gross negligence in the handling of Ms. Schmierer's accounts. The panel awarded $360,800 to Ms. Schmierer, which included $100,000 in punitive damages, $68,800 in attorney's fees, $172,000 in compensatory damages, and $20,000 in costs.
"The arbitration panel was influenced by a number of factors, including Ms. Schmierer's lack of investment experience and investment knowledge, Kvalvog's completion of a new account form for Ms. Schmierer that contained materially inaccurate information concerning her financial situation and investment experience, and Kvalvog's sale of more than $2 million in Quicksilver Resources, Inc. ("Quicksilver") notes to Ms. Schmierer and other investors from Wells Fargo's inventory right after Standard & Poor's issued a highly negative research report on Quicksilver's outlook," opined Kalju Nekvasil, Esq., of Goodman & Nekvasil, P.A., the Clearwater, Florida, law firm representing Ms. Schmierer. "Brokerage firms must deal fairly with investors," says Nekvasil.
On September 28, 2018, another client of Goodman & Nekvasil, P.A., Robert J. Anderson of Moorhead, Minnesota was awarded $75,383.75 by a FINRA arbitration panel against Wells Fargo and Kvalvog. Mr. Anderson alleged that Wells Fargo and Kvalvog recommended that he invest $150,000 in a Quicksilver note and falsely represented that this was a safe investment. Mr. Anderson also alleged that this investment recommendation was unsuitable for him because he wanted only safe investments.Back to Recent Cases