A FINRA arbitration panel has ordered Wells Fargo Advisors to pay a former client more than $262,000 for failing to promptly liquidate his brokerage account, according to a recent FINRA filing and details provided by the client’s lawyer.
Jeffrey Ball, a Los Angeles psychologist, gave the firm written instructions to close the account because he had decided to transfer the assets to a new adviser at another broker-dealer, Ball’s attorney, Philip Aidikoff of California law firm Aidikoff, Uhl & Bakhtiari, explained.
The account consisted of highly liquid mutual funds totaling more than $3 million, according to Aidikoff.
Rather than liquidate the account, the firm sent Ball’s liquidation instructions to India, a process which took six days, and then were rejected because the Indian representative “didn’t like the way the instructions were written,” Aidikoff said. The instructions “bounced around” for more than a month before his client’s request was finally honored, Aidikoff claimed.
In the meantime, the value of the client’s account dropped by almost $75,000, an amount Ball and Wells Fargo stipulated in arbitration documents.
“It was the course of conduct internally that I found so bizarre,” Aidikoff said. “I’ve been doing this kind of work for more than 25 years and I’ve never seen anything like this.”
In FINRA’s filing, the panel criticized the firm’s procedures to process a liquidation request, saying they were “seriously flawed and should be improved.”
Emily Acquisto, a spokeswoman for Wells Fargo Advisors, declined to comment.
The panel held the firm liable for almost $75,000 in compensatory damages and more than $187,000 in punitive damages.
“They very vigorously defended their compliance system and their procedures and I think the panel got pissed off,” Aidikoff said.