Wells Fargo Broker Arbitration Claim Results in $90K Award For Investor

A financial industry arbitration panel has awarded a couple more than $90,000 in an investment arbitration case against Wells Fargo and one of its brokers. 

The Financial Industry Regulatory Authority (FINRA) ruled in favor of Alex and Claire Moskvin in a Wells Fargo broker arbitration claim. The couple invested nearly $1 million in profit from the sale of their home in 2006 with Wachovia, which is now owned by Wells Fargo. The couple became concerned when the market began to struggle in 2008 and 2009, and said they contacted their broker, Eric Kleiner with their concerns, but he told them to not worry. They eventually lost nearly $227,000.

Their claim against Kleiner and Wells Fargo alleged that the company failed to properly review and respond to the Moskvins’ concerns. The FINRA arbitration panel awarded the couple $90,000, plus 4% annual interest that will be retroactive to March 3, 2009.

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FINRA is a non-governmental regulatory body that handles the resolution of disputes between investors and stockbrokers and other financial firms. It was created in July 2007 as a successor to the National Association of Securities Dealers, to arbitrate stock broker fraud claims that can include charges of breach of contract, breach of fiduciary duty, negligence, misrepresentation, unauthorized trading and other claims that investments were improperly handled.

Broker arbitration claims have skyrocketed in recent years, increasing 43% last year over the 4,982 cases filed in 2008. Breach of fiduciary duty was charged in 4,206 of those cases, making it the leading complaint filed last year. Misrepresentation and negligence were the next two most common charges, with 3,408 and 3,405 cases, respectively.

Mutual funds were the most common target of investor arbitration, with 1,556 claims filed against them. Many attribute the increase in filings to the collapse of the sub-prime mortgage market at the end of 2007. A number of high-profile stockbroker fraud arbitration claims have been won by investors who say that some funds which claimed to be conservative violated their prospectus by investing heavily in sub-prime mortgage financial products.


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