Wells Fargo

Wells Fargo to pay "defamed" broker $500,000

A unit of Wells Fargo & Co must pay $500,000 to a broker who alleged the firm made defamatory statements about him in a regulatory filing, according to a ruling by a Financial Industry Regulatory Authority arbitration panel.

The ruling, which includes $400,000 in punitive damages, is rare, lawyers said, because brokerages are often successful in arguing that statements they make in a document they must file with regulators when a broker leaves the firm, known as Form U5, are privileged.

Maxim Minevich, a former broker at a Baltimore office of Wells Fargo Advisors LLC, originally sought nearly $4 million in damages, when he filed the claim in late 2010, according to the ruling last Thursday.

Minevich alleged the firm reported defamatory information about him in a regulatory filing with FINRA after wrongfully terminating him in 2010.

A FINRA panel in Baltimore agreed with Minevich, finding that his termination was based on information from a manager who provided "false, misleading and inaccurate" information, according to the ruling.

The manager, who previously showed "personal animus" against Minevich, "used a single customer complaint" that was "quickly and easily resolved" as the incident that led to his termination, the panel wrote.

Arbitrators recommended expunging the erroneous statement from the firm´s original filing for Minevich. Expungement recommendations must be approved by a court.

A spokeswoman for Wells Fargo decline to comment.

"It was misplaced animosity," said Marc Schifanelli, a lawyer in Annapolis, Maryland who represented Minevich. "It had nothing to do with (Minevich´s) professionalism," he told Reuters.

Minevich has been unable to find work because of the statement in the filing, said Schifanelli.

"It´s an achievement," said Laurence Moy, a lawyer for Outten & Golden LLP in New York who represents financial professionals in employment disputes. Defamation law in Maryland may have helped Minevich´s claim, said Moy, who was not involved in the case.

The outcome would have been highly unlikely in New York, Moy said. In 2007, a state court ruled that brokerages are immune from defamation statements made in such documents.

A punitive damages award is also unusual, as arbitrators did not have to award more than compensatory damages, Moy said.

"When you get to the point where you´ve won a punitive award for defamation, you´ve reached a point where the arbitrators were incensed about the bank´s conduct," he said.

(Published by Reuters - December 13, 2011)

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