Wells Fargo breached its employment agreement with an ex-Wells Fargo Advisors FA by referring clients to its bank reps rather than to its brokerage unit, according to a lawsuit filed by an former advisor.
Joseph Michael Shimko, the former WFA advisor and a 16-year industry veteran, filed his lawsuit in federal court after a Finra arbitration panel ruled in favor of Wells Fargo’s claims against him seeking repayment of promissory notes allegedly due after he left the wirehouse in 2017. The Finra panel ruled Shimko owed WFA $474,000 plus $61,000 in attorney fees.
But in his new lawsuit, Shimko is asking the court to toss that Finra ruling because of his allegations that the arbitrators denied him the opportunity to call two other ex-WFA advisors who would have corroborated his claims about the referrals going to bank fiduciaries rather than the brokerage unit.
Shimko also argues the panel failed to postpone the hearing to accommodate related conflicts caused a week before his scheduled Finra hearing by Hurricane Dorian, which ravaged parts of the Florida coastline where he resides.
A Wells Fargo spokesperson declined to comment on the litigation.
Christopher Kammerer of West Palm Beach, Fla. law firm Kammerer Mariani, who represents Shimko, did not return a request for comment for this story.
Wells Fargo sent the referred clients to the bank fiduciaries rather than the brokerage unit because it could generate higher revenues that way, Shimko argues in his lawsuit.
Wells Fargo also “improperly re-distributed existing clients of departing financial advisors” to the bank rather than the brokerage unit, violating its own policies, Shimko alleges in his lawsuit.
As a result, Shimko and other WFA FAs in his unit lost out on “several hundred millions of dollars in client accounts,” he alleges.
Two other ex-WFA advisors, who now work at Raymond James, would have appeared at the Finra hearing if the panel hadn’t excluded them, Shimko alleges.
Those two advisors — like Shimko — were part of an “exodus” who left WFA because of the parent bank’s alleged practices depriving its FAs of referrals, Shimko argues.
The two would have testified about clients getting referred to bank fiduciaries rather than the brokerage unit, Shimko alleges.
At the hearing, another ex-WFA, who is also at Merrill Lynch now, did testify. That advisor has similarly defended against WFA’s claims that he owes it money with counterclaims that the bank sent clients to its fiduciaries rather than its brokerage unit., according to Shimko’s lawsuit.