Financial Planning (August 2, 2022) - A Georgia appeals court overturned a ruling that found Wells Fargo and its Wall Street regulator made a secret deal to choose bank-friendly arbitrators for a case involving a former client who lost more than $1 million.
The decision reversed a startling victory by the former client, Brian Leggett, in a Georgia superior court in January. In that now-overturned decision, a Fulton County Superior Court judge questioned "the entire fairness" of FINRA's mandatory arbitration process and said the Wall Street bank "committed fraud" on an arbitration panel. Judge Belinda Edwards' bombshell decision also found that a Wells Fargo broker made "perjured testimony" and described a "secret agreement" between the Financial Industry Regulatory Authority and the bank to select arbitration panels to oversee client complaints. Watchdog FINRA supervises the brokerage industry.
Michael Edmiston, a lawyer and president of the Public Investors Advocate Bar Association, whose lawyers represent investors in claims against financial firms, said the overturning reflects "a presumption that arbitrator decisions are to be given great weight and respect." He added that it signaled that with mandatory arbitration, "an arbitrator is not required to follow the law. This is what the parties contract for. Call it rough justice."