FINRA Panel finds Wells Fargo Violated Nevada’s New Fiduciary Rule

According to an article in the Wall Street Journal this week, a Nevada investor was reportedly awarded $40,000 in compensatory damages in the first case that invoked Nevada’s fiduciary rule, which requires all types of financial advisors to put their clients’ interests above their own.

The Financial Industry Regulatory Authority (FINRA) ruled in favor of the claimant, a Nevada doctor, who alleged breach of fiduciary duty; negligence; failure to supervise, fraudulent misrepresentation and omissions; and violations of Nevada’s state securities law.

The claimant reportedly hired Wells Fargo to manage her savings account in 2018, requesting low-risk money market accounts for convenient access to cash.

When her brokers reportedly invested her savings in riskier products that were impacted by the volatility of the last quarter of 2018, as opposed to the conservative investments she requested, she reportedly lost $41,000 – approximately 6 percent of her portfolio.

FINRA awarded De Jong $40,851.40 plus interest and $600 for costs, nine months after her complaint was filed.

According to the Wall Street Journal article, complaints against brokers for breaching a fiduciary duty aren’t uncommon. “So far this year, there have been 1,138 arbitration cases—about half the number of new cases filed at the Financial Industry Regulatory Authority this year—alleging such a violation.”

The win in Nevada may be in indication that some states are enacting tougher investor protections. Massachusetts and Florida also reportedly have strong securities laws and New Jersey, Connecticut and New York are reportedly in the process of tightening up securities laws involving the fiduciary standard as well, according to the article.

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