There is a popular country song by Garth Brooks suggesting that we should thank God for the prayers he doesn’t answer. Evidently a securities arbitrator had the same idea when deciding a case filed by investor Fred Holczer against Wells Fargo Investments.
Holczer asked his Wells Fargo stockbroker to invest $207,000 of his 401(k) money into a conservative mutual fund operated by Wells Fargo. The brokerage firm invested the money but in the wrong fund. Instead of depositing the money into the mutual fund, the money was instead parked in a money market account. Several months later, he noticed the money was put in the wrong account.
There is some question as to whether Holczer bears any responsibility for not checking his statements and confirmations in a timely fashion but that was ultimately irrelevant. The arbitrator (claims against stockbrokers are almost always arbitrated before the Financial Industry Regulatory Authority or “FINRA” for short) found that Wells Fargo failed to honor the customer’s written instructions in a timely manner.
Fortunately for the customer, had the money been invested as directed, he would have lost money. The money market account, while paying very little interest, kept him from losing any money. In other words, Wells Fargo was negligent but their negligence did not cause any damages to Holczer.
Ultimately, FINRA awarded him $500 for his troubles (an amount roughly equal to his filing fee.)
I am not quite sure why Holczer filed his claims against Wells Fargo. Many times investors will try to argue that had they invested in this stock or that fund they could have made more money. Those damage calculations are simply too speculative and are not recognized but most arbitration panels.
In order to prevail in a claim against a stockbroker or the brokerage firm you must have three things:
- There must be liability (the broker must have done something wrong).
- There must be damages – you have to prove what you lost.
- There must be the ability to collect.
Here Wells Fargo certainly was negligent in putting the money into the wrong account and has the financial ability to pay an award or judgment against the company. Where Holczer’s claim failed however, is that he simply couldn’t prove how he was damaged. In fact, the arbitrator believes he made more money by the brokerage’s firm mistake than had they listened to him.
If you have been injured by the actions of a stockbroker, give us a call. Most cases can be handled on a contingent fee basis meaning no legal fees unless you get paid. If your broker or investment advisor doesn’t honor your instructions, makes inappropriate recommendations, overcharges you or is negligent in handling your financial affairs, call us. The stockbroker fraud lawyers at Mahany & Ertl, have helped many people get back their hard earned money.
Mahany Law- America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, California; and Portland, Maine. Services available in most states.