Newsletter Signup

Search Our Blog

WELLS FARGO WINS $1M FROM DISCHARGED BROKER

By Erwin J. Shustak, Esq. of Shustak Reynolds & Partners, P.C. posted on Friday, November 18, 2016.

Erwin J. Shustak, Esq.
619.696.9500 ex. 109
[email protected] 

In yet another loss to a broker litigating an upfront note case by claiming he was wrongfully terminated, Wells Fargo obtained a $1 million recovery against a former broker, Eric Zakarin, according to a recent FINRA award.

Former broker Zakarin was terminated by Wells Fargo in April, 2015, after helping a client repatriate currency from Switzerland to the U.S. Allegedly, Zakarin failed to provide necessary documentation to U.S. Customs and Border Protection, as required by law. Wells Fargo then initiated a FINRA arbitration to recover the unpaid balance of approximately $1 million from Zakarin’s up-front, forgivable loan. These up-front, forgivable loans are common in the securities industry and are part of the compensation given to brokers to change firms.

Zakarin asserted a counterclaim alleging that Wells Fargo wrongfully terminated him and intentionally interfered with his prospective economic advantage. The FINRA panel which heard the case in New Jersey, awarded Wells Fargo the entire balance he owed under his note, plus $375,000 of Wells Fargo’s legal fees, $96,000 in accrued interest, and $10,000 in other fees, a total loss to Zakarin.

Historically, brokers who arbitrate disputes with their former firms where they owe balances on their up-front notes, face a very uphill battle, losing in over 95% of the cases. Our firm has extensive experience in arbitrating notes cases, and we have found that litigating the case and then reaching a settlement through mediation is often the best approach and results in the best outcome for our broker clients. Panels just don’t like these note cases and overwhelmingly find in favor of the firms. For Zakarin, this was a very costly lesson to learn.

Shustak Reynolds & Partners, p.c. focuses in the areas of securities, financial services and complex business disputes. For more information, contact our managing partner, Erwin Shustak. More information is available at www.shufirm.com.

Share This Article linkedin