Wells Fargo denies it breached its employment agreement with one of its ex-FAs by referring clients to its bank reps rather than to its brokerage unit.
The wirehouse issued that denial in its Nov. 15 response to a lawsuit filed by Joseph Michael Shimko, the former Wells Fargo Advisors FA, who previously wanted the court to toss a more than $500,000 arbitration award his former employer won against him.
In its answer, Wells Fargo labels Shimko’s allegations "inaccurate and without merit." The wirehouse also argues Shimko "strategically filed to stop Finra from suspending his Finra licenses."
Shimko, a 16-year industry veteran, now works at Bank of America’s Merrill Lynch. He 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's fees.
Shimko asked 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 argued the Finra 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.
He accused the panel of preventing two other ex-WFA advisors — part of an “exodus” that left the wirehouse because of the bank’s alleged practices of depriving its FAs of client referrals — from testifying at the hearing.
Wells Fargo declined to comment for this article.
But in its answer, Wells Fargo argues: "Shimko has failed to supply any evidence to support his allegations.” Therefore, he has not identified a standard for vacating or modifying the arbitration award, Wells Fargo argues. Specifically, the wirehouse argues that Shimko didn’t show the arbitrators were “guilty of misconduct in refusing to postpone the arbitration or that he was denied a fundamentally fair hearing” or that they abused their discretion.
Christopher Kammerer of West Palm Beach, Fla. law firm Kammerer Mariani, who represents Shimko, did not return a request for comment for this story.
In his lawsuit, Shimko argues that Wells Fargo sent the referred clients to the bank advisors rather than the brokerage unit because it could generate higher revenues that way.
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.
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, counterclaiming that the bank sent clients to its fiduciaries rather than its brokerage unit, according to Shimko’s lawsuit.