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'
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."
Leggett had sued in the Georgia court to overturn a 2019 FINRA award ordering him to reimburse Wells Fargo tens of thousands of dollars for fees and costs related to hearing his claim. The decision against him raised eyebrows because it's rare for a Wall Street brokerage to go aggressively after a former client.
Wells Fargo
"As long as [an] arbitrator is even arguably construing or applying the contract and acting within the scope of his authority, that a court is convinced he committed serious error does not suffice to overturn his decision," the appeals decision said.
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Shea Leordeanu, a spokesperson for Wells Fargo Advisors, said the bank was pleased with the court's ruling in overturning the "erroneous" judgment.
"We were always confident in the merits of our appeal and are pleased that the Georgia Court of Appeals completely validated our position. As a result, the original arbitration award in favor of Wells Fargo has been reinstated. Additionally, a comprehensive and detailed investigation requested by FINRA also found that we acted properly," Leordeanu said in a statement.
Leordeanu was alluding to a
Craig Kuglar, a lawyer for Leggett, said he did not have a comment at this time.