Bodewell Legal Group Verdict Alert – $3,369,520.00 award in elder financial exploitation arbitration
On December 26, 2024, following a 6-day arbitration hearing conducted by Bodewell Legal Group attorneys Rhett Owens and Tyler Pritchard, a Financial Industry Regulatory Authority (“FINRA”) arbitration panel ordered Wells Fargo Clearing Services, LLC dba Wells Fargo Advisors and its employee, Stephen L. Smith, to pay our client, as executor of his mother’s estate, more than 3.35 million dollars in damages, costs and fees.
The case involved numerous claims arising from the underlying allegation that Wells Fargo failed to comply with its own policies and procedures, and with FINRA rules, in failing to identify and respond to obvious warning signs that our client’s mother, Genell Mathis, was being financially exploited by two of her nieces. More particularly, in his claim against Wells Fargo, our client alleged that his mother was told by her nieces that if she transferred more than 75,000 shares of AFLAC stock to them and several other family members, she would avoid or reduce her estate tax liability. This was a lie and upon finding out that she had been defrauded by her nieces, our client’s mother made our client promise to do everything he could to get back the AFLAC shares she felt had been stolen from her.
Wells Fargo’s liability arose in the case from the failure of its employee, Mr. Smith, and other Wells Fargo employees to identify and appropriately respond to obvious warning signs that our client’s mother was being financially exploited. More specifically, the evidence and testimony presented during the arbitration hearing established that Wells Fargo had held itself out as an industry leader in identifying and preventing the financial exploitation of elderly investors and had developed and implemented policies and procedures to accomplish this objective. However, those policies and procedures were ignored by Mr. Smith and other Wells Fargo employees even though numerous aspects of the niece’s fraud upon our client’s mother fit squarely within the parameters of the warning signs that Wells Fargo’s policies and procedures required its employees to be alert for and report. In addition, the evidence and testimony presented at the hearing also proved that there were systemic issues regarding Wells Fargo’s documentation of the identity of Ms. Nell’s Trusted Contact and its documentation and recordation of multiple Durable Powers of Attorney that were submitted to Wells Fargo on Ms. Nell’s behalf during the 18 months preceding the transactions at issue.
Wells Fargo vigorously defended against the claims asserted by our client. In fact, prior to the arbitration hearing, despite agreeing to participate in non-binding mediation, Wells Fargo offered nothing to our client in an attempt to resolve the case. And during the hearing, Wells Fargo took the untenable position that the subjective impression of the financial advisor (in this case, Mr. Smith) should have been dispositive, i.e., Mr. Smith’s feeling that the share transfers were legitimate and non-fraudulent was controlling. Of course, as we pointed out throughout the hearing, this position was directly contradicted not only by Wells Fargo’s policies and procedures and by FINRA rules, but also by the promotional materials that Wells Fargo had issued seeking to attract new clients based on its purported commitment to being a leader in identifying and preventing elder financial exploitation.
We are so happy for our client and his family and are thankful to the arbitration panel for sending a message to the financial industry that it has an obligation to protect our aging and infirmed loved ones via strict enforcement of policies and procedures designed to protect this vulnerable population. Should you or your loved one find yourself in a situation where you suspect that you have been the victim of financial exploitation, please give us a call.
Links to national news stories providing additional coverage of the FINRA arbitration award issued in this case are below:
https://www.financial-planning.com/news/wells-fargo-to-pay-nearly-3-4m-in-elder-fraud-case
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