Wells ordered to pay nearly $500K for misusing ex-advisor's name

A technical glitch that caused a superstar financial advisor's name to resurface on a Wells Fargo website long after he had departed has resulted in nearly half a million dollars in fines and costs for the firm.

A Financial Industry Regulatory Authority arbitration panel on Tuesday ruled in favor of ex-Wells advisor Nicholas Takahashi over claims that his former employer had violated a California state law forbidding the use of a person's name, voice, signature or likeness in marketing material without obtaining prior consent. Wells was also accused of fraud, misrepresentation, violations of FINRA's rules of fair practice and other violations.

All told, Wells was ordered to pay $495,360 to Takahashi. The award consisted of $81,885 in compensatory damages, $250,000 in punitive damages, $8,475 in costs, $150,000 in attorney's fees and $5,000 for witness fees.

As is common with FINRA arbitration decisions, the three-member panel in this case didn't go into its reasons. People familiar with the matter, who spoke on the condition of anonymity, said Takahashi filed his initial complaint after discovering his name had appeared on a Wells Fargo website associated with one of his former colleagues, David Dougherty.

Once a team

Dougherty and Takahashi had worked together at Wells in the Los Angeles area from 2005 to 2013 before moving their team to Morgan Stanley. Dougherty later sued Morgan Stanley over allegations that he had suffered age discrimination when his book of business was reassigned to Takahashi and he was relegated to a non-producing role after being treated for a brain condition.

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About two years after the suit was settled, in early 2020, Dougherty returned to Wells Fargo. Ali Vaghefi, a branch manager at Wells Fargo Advisors, welcomed him back with a LinkedIn post.

A page also appeared on a Wells Fargo website mentioning Dougherty in connection with Takahashi, according to sources familiar with the matter. The sources said the posting was apparently the result of a technical glitch and not deliberate.

But Patrick Mahoney, Takahashi's lawyer in the FINRA arbitration, noted that the arbitrators obviously thought the case was bad enough to merit punitive damages.

"The panel concluded that Wells Fargo knowingly used my client's name for a commercial purpose," Mahoney said. "I would add that the panel wasn't happy about that given, the award of punitive damages. We're thrilled with the result."

Mahoney declined to elaborate further on the case. Wells Fargo declined to comment.

'Rare isn't even the right word'

Takahashi, who did not respond to emails, had initially requested more than $1.8 million in damages. Douglas Schulz, a securities lawyer and the president of Invest Securities Consulting, said punitive damages in FINRA arbitration cases are extremely uncommon. So the panel in this dispute clearly thought the alleged violations were serious.

"Rare isn't even the right word," Schulz said. "So good for the arbitration panel members for taking a stance when somebody violates the rules and breaks the California code and letting them have it."

Rob Herskovits, the founder of New York-based law firm Herskovits, said it's also telling that the punitive damages were set at three times the compensatory damages.

"It's a pretty rich multiple," he said. "That's a sign that they probably either knew or really should have known this broker's name was being misused and chose not to act intentionally or were really slow in getting around to taking care of the problem."

Richard Chen, a legal advocate for advisors and the founder of New York-based Brightstar Law Group, noted that California law does not require plaintiffs in these sorts of cases to show that the party accused of misusing their name or likeness "intended to cause harm or knew that this constituted a violation of law."

Now at Raymond James

Takahashi moved his team — now named Takahashi Retirement Group — to Raymond James in Las Vegas earlier this year. He was named one of Financial Planning's Top 40 Brokers Under 40 in 2022 and received similar recognition from Barron's and Fortune. The Barron's ranking of the Takahashi Group as 232nd out of 250 top private wealth management teams puts its assets under management at $1.9 billion.

The team's website lists Takahashi as managing director and shows eight other members. It says the Takahashi Group serves everyone from corporate executives to families and retirees.