Wells Fargo Collects $715K from Connecticut Broker
A former Wells Fargo & Co. broker in Glastonbury, Connecticut, must repay $707,000 plus interest and attorneys’ fees to the company, according to a Financial Industry Regulatory Authority arbitrator.
Carroll said he could not immediately comment on the award, which represented all that Wells had sought in the claim, according to the award document published this week. The sole arbitrator also ordered him to pay $8,500 in legal fees and costs in a punitive nod at Wells’s breach-of-contract claim. Carroll did not make an appearance to defend himself in the arbitration.
So-called promissory note claims that firms bring against departing brokers have been escalating, despite lawyers’ warning to advisors that they almost invariably lose attempts to evade their contractual obligations.
Until the outbreak of the coronavirus, Wells has been actively recruiting across its employee and independent contractor channels with industry-leading offers that recruiters say can reach 325% of trailing-12 month production for $500,000-plus producers and more than 200% for some below that number. Wells has been aggressive in an attempt to replace more than 1,000 advisors who left over the past three years in the wake of well-publicized fake account and production quota scandals throughout the bank company.
The banking giant does not disclose the total amount of advisor loans on its books.
LPL, the largest independent broker-dealer, had $338 million in forgivable loans on its balance sheet at the end of 2019, up 45% year-over-year, as it scaled up its recruiting efforts. The balances are close to $3 billion at Morgan Stanley and around $2 billion at UBS Wealth Management USA.
Morgan Stanley in February sued a former broker who allegedly transferred his assets to family members in order to avoid repaying a $1.4 million arbitration award over a note balance.
Carroll began his 21-year financial services career with Advest in 1999 as a mutual fund analyst, according to his online biography. He has worked as a broker since at least 2001 at discount firm Quick & Reilly, Smith Barney and Merrill Lynch—where he spent six years until joining Wells in 2014, according to his BrokerCheck history.
The single disclosure on his record is a 2014 complaint from a client of unauthorized UIT trading. The complaint was settled for $38,702, and Carroll was not asked to contribute to the settlement, according to BrokerCheck.