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Wells Fargo Wins $3M Arbitration Award from Ex-Broker

By Alex Padalka January 13, 2021

A Finra arbitration panel has ordered a former Wells Fargo broker serving five years in prison to pay $3 million to the company.

John Gregory Schmidt had joined the financial services industry in 1986 and came to Wells Fargo Advisors’ Financial Network in 2006, according to BrokerCheck. In October 2017, the company terminated him based on allegations of unauthorized money transfers between client accounts.

Finra barred Schmidt in March 2018 for failing to respond to its requests for information, and in September the same year the SEC accused Schmidt of misappropriating more than $1 million from several clients and overcharging them hundreds of thousands of dollars in commissions over the course of 14 years, hiding his fraud by falsifying account statements and sending bogus withdrawal forms.

In March 2019, Schmidt settled with the SEC for over $1 million, without admitting or denying the SEC’s allegations.

However, in June 2019, after pleading “no contest” to more than 120 counts, Schmidt received a five-year prison sentence for misappropriating more than $1 million from his clients.

His troubles weren’t over, however.

In August 2019, Wells Fargo Advisors Financial Network brought a claim against Schmidt accusing him of misappropriation of funds, indemnification and breach of a licensee agreement in connection with the allegedly misappropriated funds and the payments the company made to customers impacted by his alleged actions, according to a Finra award document published on January 11.

Wells Fargo sought $2,998,814.81 in compensatory damages, fees, costs, expenses and any other relief deemed just and proper by the Finra panel, the self-regulator says.

The panel awarded the full $2.999 million amount to Wells Fargo, according to the document.

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Tags:  Fees and compensation , Regulatory/legal issues , Wells Fargo , Wells Fargo Advisors

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