March 08, 2022

Warren, Porter Release FINRA Response On Troubling Allegations of Wells Fargo Misbehavior and FINRA’s Arbitration Process

FINRA response failed to answer important questions about the case or FINRA’s and Well Fargo’s activities

FINRA discloses independent investigation, promises “enhanced oversight” of decisions to remove arbitrators

FINRA Response (PDF) | Text of Letter to FINRA (PDF)

Washington, DC – 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.) released a response to their February 2022 letter from the Financial Industry Regulatory Authority (FINRA) and sent a new letter asking FINRA for complete responses to questions that the agency failed to answer.

“(W)e are disappointed that you failed to answer key questions about the specific way that arbitrators were chosen in the Wells Fargo vs. Leggett case, the actions of Wells Fargo and its representatives, and communications between Wells Fargo officials and FINRA officials about the arbitration process. Instead, you only provided us with an anodyne description of the process from FINRA’s Dispute Resolution Services (DRS),” Senators Warren and Congresswoman Porter wrote. “Your letter did nothing to dispel the concerns raised by a federal judge and by press reporting about FINRA’s handling of this cause.”

FINRA’s response did, however, disclose that FINRA “has retained an outside law firm that will … perform an independent review of … compliance with applicable rules, policies, and procedures for arbitrator selection in connection with the Leggett Case,” and that FINRA “is implementing enhanced oversight of its decisions in response to challenges by parties seeking removal of arbitrators.” 

The lawmakers concluded: “We welcome this investigation and these reforms – but the fact that you have taken these steps raises new concerns about the extent of wrongdoing in the arbitration process in the Wells Fargo vs. Leggett case. To address these concerns, we reiterate our request that you provide full and complete answers to the questions that we asked in our February 9, 2022 letter.”

The lawmakers have requested a response from FINRA no later than March 22, 2022. 

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.