In March 2011, Jason Schlesinger filed a Statement of Claim with the Financial Industry Regulatory Authority (FINRA) alleging breach of contract and seeking $1 million in compensatory damages, punitive damages, costs, and attorneys’ fees. He also sought a declaration that Wells Fargo, LLC may not enforce the promissory note against him. In the Matter of the FINRA Arbitration Between: Jason Martin Schlesinger, Claimant v. Peter Yan Hong; Wallace Lawrence Key; Wells Fargo Adivsors, LLC, Respondents v. Jason Martin Schlesinger, Counter-Respondent.
In particular, Schlesinger (Claimant) alleged that he was fraudulently induced to join Wachovia Securities by a couple of promises. Those promises were: “a position in which he would be the sole broker in a start-up hub office specializing in high net worth investors; and that he would have access to a pool of names of so called orphan accounts left from a previous merger of Wachovia Securities and Gold West World Savings.” See Statement of Claim.
Claimant understood this to be a promise that he would be entitled to receive all the leads of the bankers in the new office since he would be the only broker in the office. Respondents denied these allegations and asserted affirmative defenses.
In Wells Fargo Adivsor’s (Respondent/Counter-Claimant) Counterclaim, it asserted that Claimant breached a promissory note (Note) executed by Claimant. It was alleged that when Claimant joined Wachovia the Note was executed for $925,306 on April 14, 2008. Furthermore, on July 16, 2010 the Note was amended and went down to $792,776. Respondent/Counter-Claimant requested the principal balance due on the Note ($734,052.27) plus 3.25% annual interest, costs, and attorneys’ fees.
The FINRA Arbitration Panel (Panel) did not find fraud on behalf of the recruiters Respondents Peter Yan Hong and Wallace Lawrence Key. The Panel did find, however, there was considerable confusion on the part of Respondents as to why Claimant was paid only $87,000 for his first year at Wachovia Securities. There was also confusion on how it was calculated.
Ultimately, the Panel found Claimant liable and he was ordered to pay $734,052.27 to Respondent/Counter-Claimant Wells Fargo Advisors. In addition, the Panel found Respondent/Counter-Claimant Wells Fargo Advisors liable to Claimant and ordered it to pay him $100,000. Thus, the net final award that Claimant owed was $634,052.27.
