(Reuters) - A unit of Wells Fargo & Co must pay $500,000 to a broker who alleged the firm made defamatory statements about him in a regulatory filing, according to a ruling by a Financial Industry Regulatory Authority arbitration panel.
The ruling, which includes $400,000 in punitive damages, is rare, lawyers said, because brokerages are often successful in arguing that statements they make in a document they must file with regulators when a broker leaves the firm, known as Form U5, are privileged.
Maxim Minevich, a former broker at a Baltimore office of Wells Fargo Advisors LLC, originally sought nearly $4 million in damages, when he filed the claim in late 2010, according to the ruling last Thursday.
Minevich alleged the firm reported defamatory information about him in a regulatory filing with FINRA after wrongfully terminating him in 2010.
A FINRA panel in Baltimore agreed with Minevich, finding that his termination was based on information from a manager who provided “false, misleading and inaccurate” information, according to the ruling.
The manager, who previously showed “personal animus” against Minevich, “used a single customer complaint” that was “quickly and easily resolved” as the incident that led to his termination, the panel wrote.
Arbitrators recommended expunging the erroneous statement from the firm’s original filing for Minevich. Expungement recommendations must be approved by a court.
A spokeswoman for Wells Fargo decline to comment.
“It was misplaced animosity,” said Marc Schifanelli, a lawyer in Annapolis, Maryland who represented Minevich. “It had nothing to do with (Minevich’s) professionalism,” he told Reuters.
Minevich has been unable to find work because of the statement in the filing, said Schifanelli.
“It’s an achievement,” said Laurence Moy, a lawyer for Outten & Golden LLP in New York who represents financial professionals in employment disputes. Defamation law in Maryland may have helped Minevich’s claim, said Moy, who was not involved in the case.
The outcome would have been highly unlikely in New York, Moy said. In 2007, a state court ruled that brokerages are immune from defamation statements made in such documents.
A punitive damages award is also unusual, as arbitrators did not have to award more than compensatory damages, Moy said.
“When you get to the point where you’ve won a punitive award for defamation, you’ve reached a point where the arbitrators were incensed about the bank’s conduct,” he said.
Reporting by Suzanne Barlyn; Editing by Walden Siew