Wells Fargo Loses Long-Running Broker Dispute With UBS
May 16 2016 - 4:50PM
Dow Jones News
An arbitration panel has ordered Wells Fargo & Co.'s
brokerage arm to pay a unit of UBS Group AG $1.1 million to resolve
a multiyear dispute over a financial adviser accused of taking
confidential account information before leaving the Swiss bank.
UBS Financial Services Inc., the company's U.S.
wealth-management arm, filed an arbitration claim with the
Financial Industry Regulatory Authority alleging that Chicago-based
financial adviser David Kinnear stole thousands of UBS's client and
business records and other proprietary information ahead of
resigning in 2012 to join Wells Fargo Advisors LLC.
A person familiar with the matter claimed the adviser downloaded
client information, statements and reports before he left UBS and
at some point distributed this information on flashdrives to
clients.
Brokers' moves among the major brokerages are governed by the
Protocol for Broker Recruiting, a 2004 accord that has helped limit
the number of lawsuits and arbitration claims filed over broker
moves. The protocol limits brokers to taking names, addresses,
phone number and email addresses for "clients that they serviced
while at the firm."
Big brokerages across the industry in recent years have taken
greater steps to keep clients amid a wave of adviser departures,
including applying greater scrutiny to departing brokers' client
lists and the steps advisers take to persuade clients to join them
when they leave.
In addition to also claiming that Mr. Kinnear owed an
unspecified amount on promissory notes, UBS alleged that Mr.
Kinnear's compensation at Wells Fargo was tied to the successful
transfer of UBS's clients to the San Francisco-based firm.
Wells Fargo, for its part, denied UBS's claims and filed a
counterclaim accusing UBS of unfair competition by refusing to
communicate, to provide tax information and preventing clients from
transferring accounts from UBS.
A Wells Fargo spokeswoman declined to comment specifically on
this case, but said the firm "takes its obligation to protect
client information seriously."
She also confirmed that Mr. Kinnear is still employed at Wells
Fargo.
A UBS spokesman said the firm "is pleased with the arbitrators'
decision in this matter."
In an award document dated Thursday, the arbitration panel found
that Wells Fargo and Mr. Kinnear were jointly and severally liable
and awarded UBS $1.5 million in damages. Offsetting the award was
$400,000 in damages awarded to Wells Fargo, which UBS will have to
pay.
As is customary, the Finra arbitrators didn't provide details on
the reasoning for their decision.
Write to Anna Prior at anna.prior@wsj.com
(END) Dow Jones Newswires
May 16, 2016 16:35 ET (20:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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