NEW YORK - A broker who claimed he was fired by Wells Fargo Advisers for whistleblowing has been awarded $6.8 million by an arbitration panel.
Greg Kipple worked for Wachovia Securities LLC starting in 2003 and then for Wells Fargo Advisors LLC, a unit of Wells Fargo Corp., after its acquisition of Wachovia in 2008. He was fired in 2009 and filed a complaint the next year, seeking more than $23 million for wrongful termination, defamation and for violation of New Jersey's state whistleblower law, according to a Finra ruling dated Wednesday.
The ruling didn't give specifics of Kipple's allegations, but he alleged in regulatory filings that Wells Fargo terminated him for "truthfully responding to a regulatory inquiry" by the Financial Industry Regulatory Authority, Wall Street's self-policing watchdog, in 2009. According to his lawyer, he repeatedly raised concerns about another broker's actions.
A Finra arbitration panel on Wednesday awarded Kipple $4.3 million in compensatory damages from his former employers, and another $1 million in punitive damages, aimed at punishing Wells and Wachovia under a New Jersey state law that offers protection and legal relief for whistleblowers. It added $1 million more for defamation that Kipple says he suffered because of language Wells Fargo included on his Form U5, a form that brokerages file with regulators when a financial adviser leaves the firm. He was awarded $530,000 for legal fees and other costs.
Punitive damages and defamation awards are rare, say lawyers. According to the ruling, the defamation award resulted from Wells Fargo's using the term "discharged" on Kipple's regulatory filings. That word typically signals an involuntary termination and that the employer was unhappy with the broker in some way, says Marc Dobin, a securities arbitration lawyer in Jupiter, Fla. The panel ordered the term expunged.
Companies are usually very careful with the language they put on a U5, says Thomas Momjian, a securities lawyer with Coss and Momjian LLP in Pennsylvania. But if a firm is found to be unfair, it can pay big to make up for the damage caused to the broker, who likely had trouble finding a new job because of the language, Momjian says.
"It's not every day an award like this comes out," he says. "It reminds everybody of their obligation to carefully assess the U5 language."
The Finra panel didn't explain the reason for its ruling, as is common in arbitration cases.
According to Kipple's lawyer, David B. Wechsler of Wechsler & Cohen LLP in New York, Kipple had raised his concerns about another Wells Fargo broker who was disciplined by management three times, but not fired until after a customer filed an arbitration complaint in mid-2009.
"Clearly we're pleased with the result," says Wechsler. "But although it may seem like a large number, clearly Mr. Kipple wished this never happened," he said.
A Wells Fargo spokesman said the company is disappointed by the decision and is reviewing its options. He declined to comment further.
