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FINRA Awards Wells Fargo Advisor More Than $1.3 Million in Damages Arising From Promissory Note Dispute

On March 3, 2016, a Financial Industry Regulatory Authority (“FINRA”) panel (the “Panel”) rendered an award (the “Award”) in favor of Bruce Howard Tuchman (“Bruce Tuchman”) and Michelle H. Tuchman (“Michelle Tuchman”) for more than $1.3 million in compensatory damages, resulting from Wells Fargo Advisors, LLC’s (“Wells Fargo”) wrongful termination of Bruce Tuchman and illegal conversion of funds from Michelle Tuchman’s brokerage account.  The Award does not give any indication as to the relationship between Bruce Tuchman and Michelle Tuchman.

Bruce Tuchman had previously been employed at Smith Barney, but left to join Wells Fargo in 2009.  According to his Form U-5, he was terminated from Wells Fargo in June 2013 for allegedly failing “to follow firm policy regarding contacting customers prior to entering orders.”

In rendering the Award, the Panel consolidated two separate cases.  The first case (Case Number 13-02581) (“Case 1”) was Wells Fargo against Bruce Tuchman, with Frank Dryer (“Dryer”), a complex manager based out of Albany, New York, as a third-party respondent.  The second case (Case Number 13-02939) (“Case 2”) was Bruce Tuchman and Michelle Tuchman against Wells Fargo and Dryer.

Wells Fargo filed their Statement of Claim in Case 1 on September 3, 2013, alleging the following causes of action: breach of promissory note; conversion; and unjust enrichment.  Bruce Tuchman filed his Statement of Answer, Counterclaim, and Third-Party Claim on November 21, 2013, denying the allegations, asserting various affirmative defenses, and asserting the following causes of action in his counterclaim and third-party claim: wrongful termination; retaliation; defamation; conversion; breach of contract; breach of the implied covenant of good faith and fair dealing; intentional interference with contractual relations and prospective economic advantage; unlawful and deceptive business practices; and severe emotional distress.  In addition, he also filed an Addendum to the Statement of Answer, Counterclaim, and Third-Party Claim on November 21, 2013.  Wells Fargo and Dryer filed a Joint Statement of Answer on December 9, 2013, denying the allegations and asserting various affirmative defenses.

Bruce Tuchman and Michelle Tuchman filed their own Statement of Claim in Case 2 on October 7, 2013, alleging the following causes of action: wrongful termination; retaliation; defamation; conversion; breach of contract; breach of the implied covenant of good faith and fair dealing; intentional interference with contractual relations and prospective economic advantage; unlawful and deceptive business practices; and severe emotional distress.  They subsequently filed an Addendum to the Statement of Claim on November 12, 2013.  Wells Fargo and Dryer filed a Joint Statement of Answer on December 13, 2013, denying the allegations and asserting various affirmative defenses.

At the conclusion of the hearing, Wells Fargo sought $231,570.27 in principal and interest from Bruce Tuchman relating to his promissory note, along with unspecified punitive damages and $494,477.89 in attorneys’ fees.  Bruce Tuchman and Michelle Tuchman sought the following: $2,987,470 in compensatory damages; $17,918,820 in punitive damages; recruitment bonus reimbursements of $128,241.55 for Bruce Tuchman and $81,131.63 for Michelle Tuchman; cancellation of the remaining balance of Bruce Tuchman’s promissory note of $204,834.43; $1,000,000 for defamation; $4,479,705 for emotional distress; $250,000 for conversion; $44,040 for the loss of the Wachovia Securities Performance Award Plan; $100,000 for discovery sanctions; $619,502 for legal fees; $56,233 for expert fees; and expungement of Bruce Tuchman’s Form U-5.

The Panel eventually ruled against Wells Fargo, and ordered it to pay $81,131.63 in compensatory damages to Michelle Tuchman and $128,241.25 in compensatory damages to Bruce Tuchman, plus interest.  In addition, the Panel ordered Wells Fargo to pay $1,157,302 in compensatory damages to Bruce Tuchman, plus interest, representing the amount of compensation Bruce Tuchman would have earned “between his termination date and the date that he likely would have actually retired, but for the termination at issue.”  The Panel also awarded Bruce Tuchman and Michelle Tuchman $522,903.20 in attorneys’ fees, and recommended the expungement of Bruce Tuchman’s Form U-5, with the reason for termination changed to “Other,” and the termination explanation changed to “terminated without cause”.  All claims against Dryer were denied in their entirety.

Lax & Neville LLP has nationally represented small broker-dealers, financial services professionals and securities industry companies in regulatory matters and securities-related and commercial litigation.  Lax & Neville LLP also represents registered representatives in negotiating Form U-4 and Form U-5 language with firms prior to filing, or in arbitrations seeking expungement of Form U-4s and U-5s containing false and defamatory information.  In addition, Lax & Neville LLP represents employees who have been terminated for unlawful reasons.  Please contact our team of attorneys for a consultation at (212) 696-1999.