A row between two brothers who once worked together as part of a Wells Fargo Advisors team has led to four years of litigation. It has also embroiled the wirehouse and required WFA to defend against allegations it allowed a breach of its advisors and clients’ data and failed to report the extent of that breach to regulators as required.
Most recently, in late September, one of the brothers, Gary Sinderbrand, filed a federal lawsuit to vacate a Finra panel’s August ruling.
That ruling tossed his claims against WFA and his brother and former co-advisor, Steven Sinderbrand. Gary no longer works at WFA and is no longer registered as a broker-dealer representative.
In his new federal case, Gary Sinderbrand has filed documents from his state court cases and a Finra hearing — all of which present a cautionary tale for any FA who teams up with a sibling and then makes a deal to take some time off.
In the new litigation, as well as before Finra, Gary Sinderbrand alleges that in 2017 WFA answered his discovery request in a state court lawsuit by releasing a CD that contained the personal information — including for WFA FAs and some of their clients — of about 100,000 people. Sinderbrand argues in his new federal lawsuit that WFA failed to disclose fully to regulators, as required, the extent of the breach, and that the Finra panel then improperly ignored that allegation.
WFA’s lawyers told the Finra panel that it asked Gary Sinderbrand to return the CD, which he did to the court under protective seal, and then the wirehouse sought injunctions barring him from disseminating the information.
WFA wants the Finra ruling to end the dispute.
“We are pleased that the arbitration panel dismissed all claims and we will oppose this attempt to vacate the award,” a Wells Fargo spokesperson writes in an emailed comment to FA-IQ.
Gary Sinderbrand appears online on the roster of speakers for hire with Ro Morrison & Associates, which caters to the financial services industry. The listing describes his 30-year FA career as a million-dollar-producer and cofounder of a training program for Merrill Lynch (which, along with UBS, is one of his previous employers).
Gary Sinderbrand declines to comment publicly about his lawsuit.
WFA’s website describes his brother, Steven Sinderbrand, as a WFA FA in New York with 26 years of experience and a law degree from Pepperdine University. Steven Sinderbrand is named as a defendant in his brother’s new lawsuit, as well as in the previously-filed state court and Finra cases.
Neither Steven Sinderbrand nor his lawyer returned a request for comment for this story.
A sabbatical that turned sour
According to Gary Sinderbrand's federal lawsuit, he left WFA in 2013 to take a sabbatical and start a company to research medical solutions for sufferers of Crohn’s disease, among other ailments. But after leaving their team, Gary continued to consult with Steven about the advisory business. The two brothers had a verbal agreement that Gary would continue to receive payments from Steven after he left, both Sinderbrands testified at the Finra hearing.
Steven Sinderbrand testified that he had agreed to pay his brother $62,000 twice a year for two years and “loan him money to help support him since he was going to be taking a cut in pay.”
Gary Sinderbrand testified that his brother agreed he would get that amount in cash, but that it would be credited for a 50% share of their WFA team’s revenues that Steven would owe him upon his request.
Within two years of Gary's leaving, disputes arose between the Sinderbrand brothers.
In 2015, after Steven stopped paying the compensation, Gary sought to return to his WFA job, according to Gary’s new lawsuit. Steven did not want Gary to return to their business and “defamed” his brother, causing WFA to decide to not rehire Gary, according to Gary’s lawsuit.
At the Finra hearing, Steven Sinderbrand denied that specific allegation.
Steven Sinderbrand testified that he wanted his brother to return to WFA and explicitly said he did nothing to prevent that outcome, according to a rough transcript of the proceeding, which is attached as an exhibit to Gary Sinderbrand's federal lawsuit.
The news that Gary Sinderbrand would not be permitted to return to WFA “shocked and disappointed him,” Steven Sinderbrand testified. “In spite of everything that was going on interpersonally between Gary and me, I was still working towards rejoining, moving forward, and putting all this … behind me,” he testified.
In November 2016, Gary Sinderbrand filed a lawsuit against Steven Sinderbrand in a New Jersey state court, making defamation and tortious interference claims against his brother. In April 2017, Gary Sinderbrand filed a lawsuit in a New York state court naming both Steven Sinderbrand and WFA, and made defamation and breach of settlement claims.
In May 2017, WFA filed a successful motion to compel Gary Sinderbrand to try the claims in the New York case before Finra.
It was not until July 2017, however, that the fight between the brothers inadvertently became a much bigger headache for WFA. That’s when WFA gave Gary Sinderbrand’s lawyer a CD in response to his client’s third-party subpoena in the New Jersey lawsuit against Steven Sinderbrand.
According to the account The New York Times published that same month:
“When a lawyer for Gary Sinderbrand, a former Wells Fargo employee, subpoenaed the bank as part of a defamation lawsuit against a bank employee, he and Mr. Sinderbrand expected to receive a selection of emails and documents related to the case. But what landed in Mr. Sinderbrand’s hands on July 8 went far beyond what his lawyer had asked for: Wells Fargo had turned over — by accident, according to the bank’s lawyer — a vast trove of confidential information about tens of thousands of the bank’s wealthiest clients. The 1.4 gigabytes of files that Wells Fargo’s lawyer sent included copious spreadsheets with customers’ names and Social Security numbers, paired with financial details like the size of their investment portfolios and the fees the bank charged them. Most are customers of Wells Fargo Advisors, the arm of the bank that caters to high-net-worth investors.”
A big discovery in discovery
In a brief filed in his most-recent federal lawsuit, Gary Sinderbrand argues: “The personally identifiable information for persons on the CD was not redacted in any manner nor was there a confidentiality agreement or protective order governing the data produced.”
Three days after the Times published its story, WFA filed successful motions seeking the courts in New Jersey and New York to issue injunctions barring Gary Sinderbrand from disseminating the information.
“Despite noting internally that Gary Sinderbrand had not disclosed client data to the New York Times, Wells Fargo repeatedly told the court the exact opposite in order to get an overbroad injunction. Wells Fargo internally knew that Gary Sinderbrand did nothing improper and did not disclose client information yet misled the court to the contrary in order to silence Gary and obtain overbroad injunctions,” Gary Sinderbrand argues in his federal lawsuit’s brief.
This summer, during 12 sessions before a Finra arbitration panel, Gary Sinderbrand presented his claims, and Steven Sinderbrand and WFA presented their defenses and counterclaims.
On Aug. 15, less than two weeks after the last session, the arbitrators issued a ruling denying all of Gary Sinderbrand’s claims against his brother and former employer. The panel also ordered Gary to pay WFA $772,264 in compensatory damages.
“We deny Mr. [Gary] Sinderband’s claims and allegations. There has already been a complete hearing of Mr. Sinderbrand’s claims on all of these issues in front of a Finra arbitration panel and Mr. Sinderbrand’s claims were rejected in all respects,” David Hille, a lawyer with New York’s White & Case, which represents Wells Fargo, writes in a statement emailed to FA-IQ.
For Gary Sinderbrand, that Finra ruling should not represent the end of this story.
Among his arguments for why the federal court should vacate the Finra ruling: The panel “refused to allow [Gary] to show the panel at final hearing a CD which would have unequivocally proven [Gary’s] claims,” he writes in a brief supporting his federal lawsuit.