Arbitrator Orders Wells to Clean Private Banker’s Record—and Pay for It
A Financial Industry Regulatory Authority arbitrator has ordered Wells Fargo to clear the name of an Atlanta branch-based private banker fired for improperly pushing sales of renter’s insurance, and to pay her lawyer’s fees.
The arbitrator did not explain his finding that Wells’s Form U-5 dismissal language was defamatory and should be expunged. But he appeared to show his impatience with the bank with his order to have it pay her legal fee of $30,000.
“They launched some kind of investigation in 2018 and hung a lot of junior branch level employees out to dry in effort to claw back some goodwill with regulators and the public at large,” said Robert Herskovits, her lawyer. “Wells aggressively marked up advisors’ Form U5s.”
Webster, who worked at a bank branch, was a “senior wealth management private banker” and has been a registered representative for 21 years, according to her BrokerCheck record. She did not have her own book of business at Wells, but worked with bank clients who had assets of $250,000 or more to help them “explore” investing, according to Herskovits and to herLinked In profile.
Wells discharged Webster after two bank customers complained of being “enrolled in renter’s insurance policies for which the banker received sales credit without the customers’ authorization,” according to a summary of Wells’ dismissal notice to regulators.
“Their whole investigation was suspect,” Herskovits said. “Ultimately, documents came out in discovery that demonstrated Wells Fargo didn’t even think the underlying complaint had merit.”
Webster was not the agent of record on the renters’ policies and did not receive any compensation “other than an internal referral credit after the authorized policy was in place,” she wrote in a comment to regulators summarized on her BrokerCheck record. Referring customers to authorized third parties was part of her job, she said.
Wells paid $575 million to state attorneys general at the end of 2018 for opening unauthorized accounts and for “improperly referring customers for enrollment in third-party renters and life insurance policies,” a sequel to its $185 million settlement in 2016 for opening fake bank accounts.
California revoked Wells’ insurance license last year after finding that it had helped open more than 1,400 renters’ and life insurance policies.
Several brokers based in Wells’ bank branches have filed arbitration and legal claims asserting that Wells Fargo Advisors’ bank channel recruiters falsely induced them to join by promising referrals of wealthy customers from bankers. The referrals came to a crashing halt when Wells stopped paying referral bonuses to bankers to satisfy regulators and legislators monitoring its aggressive sale culture.
A spokeswoman at Wells Fargo did not immediately return a request for comment on their complaints and on Webster’s arbitration award.
Webster, who since September has worked at Register Financial Advisors, a hybrid broker-dealer and financial planning firm in Atlanta, could not immediately be reached for comment. She left Wells in March, and had difficulty finding a job due to the dismissal language on her record, her lawyer said.
She joined Wells Fargo in mid-2007 from Banc of America Investment Services.