| July 9
July 9 A U.S. securities regulator ordered Wells
Fargo Advisors LLC to pay $2.8 million to an investor who said
the firm failed to detect fraudulent transactions and theft in
its account, according to a securities arbitration ruling.
College Health and Investment Ltd, a family limited
partnership, filed the case in Boca Raton, Florida against the
Wells Fargo & Co unit in 2010, according to a ruling
posted on Tuesday on the Financial Industry Regulatory
Authority's securities arbitration database.
The case stemmed from Wells' failure to detect alleged theft
and unauthorized transactions by an employee of the partnership
between 2006 and early 2008, according to Robert Wayne Pearce, a
lawyer in Boca Raton, Florida, who represented the partnership.
A family limited partnership is an estate planning tool used
mainly by wealthy families to preserve their assets and minimize
certain tax liabilities.
The three-person FINRA securities arbitration panel found
Wells liable on July 3 and ordered it to pay $2.3 million in
damages and interest to the partnership, College Health and
Investment Ltd. Wells must also pay $419,000 in margin interest
and $35,000 in costs. College Health had sought $4.4 million,
according to the FINRA panel ruling.
"We're disappointed in the panel's decision and don't
believe it was warranted by the facts presented during the
hearing," a Wells Fargo spokeswoman said in a statement. "We are
looking into next steps," she said.
A 2010 lawsuit filed by College Health against a former
secretary, Esther Spero, in the U.S. District Court for the
Southern District of Florida sheds light on the Miami-based
partnership's troubles. It said Spero forged names of College
Health employees who were authorized to transfer funds from its
accounts, but transferred the funds for her personal use.
In October, 2010, U.S. District Court Judge K. Michael Moore
of the Southern District of Florida, entered a $21 million
judgment against Spero, who did not respond to the partnership's
complaint. Spero allegedly operated the scheme through Wells
Fargo and other entities, according to the complaint.
Spero could not be reached for comment.
Wells tried to seek damages from Spero and another College
Health employee in the FINRA arbitration case, but the panel
ruled it lacked jurisdiction over them because they were not
FINRA-licensed securities brokers.