February 10, 2022

Warren, Porter Seek Answers on Troubling New Allegations of Wells Fargo's Atrocious Behavior and FINRA's Ability to Effectively Police the Financial System

Text of Letter (PDF)

Washington, D.C. - United States Senator Elizabeth Warren (D-Mass), a member of the Senate Banking, Housing, and Urban Affairs Committee and the Senate Finance Committee, and Congresswoman Katie Porter (D-Calif.) sent a letter to the Financial Industry Regulatory Authority (FINRA) questioning new reports of misbehavior by Wells Fargo that raise concerns about the the self-regulatory organization’s ability to fairly and effectively police the financial system. The letter comes after allegations that Wells Fargo, with the permission of FINRA, rigged the arbitration process by manipulating a list of arbitrators in a case in which the bank was alleged to have mishandled a customer’s investments.

“These findings by a Federal judge in the Wells Fargo case raise serious questions about your assertions that the FINRA arbitration process is ‘neutral, efficient and fair,’ and about whether Wells Fargo has once again sought to undermine consumer protection rules,” wrote the lawmakers.

For years, FINRA has used a computer system to randomly generate a neutral list of potential arbitrators from which the parties agree on three to decide the case. But according to the findings of Superior Court Judge Belinda Edwards, in this case, multiple names were removed from the list at the request of Wells Fargo’s lawyer and with FINRA’s permission. Judge Edwards wrote that “Permitting one lawyer to secretly red line the neutral list makes the list anything but neutral, and calls into question the entire fairness of the arbitral forum.”

“This latest report brings all three problems into focus: it reveals troubling new allegations about the atrocious behavior of Wells Fargo, the inability of FINRA to effectively police the financial system, and the unfairness of the arbitration process,” the lawmakers wrote. 

The lawmakers pressed FINRA for answers about the case, Wells Fargo’s interactions with FINRA, and the FINRA arbitration process. 

Senator Warren has a long record of calling out the wide-ranging and long-lasting pattern of illegal and abusive behavior by Wells Fargo. She has also raised concerns about FINRA’s ability to effectively enforce rules against fraudulent and abusive behavior by brokers and dealers. And Senator Warren has also fought for years to address the problems for consumers and workers caused by forced arbitration processes that limit their rights.