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FINRA Panel Finds Firms Liable For Allowing Unauthorized Transfer of Funds

A three-member Financial Industry Regulatory Authority (“FINRA”) panel has found in favor of an investor who claimed two brokerage firms allowed her ex-husband to transfer $138,700 out of her and her daughter’s accounts, without her knowledge or consent.

According to the FINRA Award, Lori Strayn claimed that her ex-husband Robert Kevin Strayn transferred funds out of her and her daughter’s accounts at Wells Fargo, without authorization, and deposited the funds into accounts at E*Trade Securities. Ms. Strayn asserted claims against Wells Fargo, her broker Fred Snyder, and E*Trade for negligence, conversion, breach of contract, breach of fiduciary duty and constructive fraud, misrepresentations, control person liability, and respondeat superior.

E*Trade asserted a cross claim against Wells Fargo for indemnification. E*Trade alleged that Wells Fargo was negligent in not contacting Ms. Strayn to verify the request to transfer assets to E*Trade.

Wells Fargo asserted a cross claim against E*Trade for indemnification. Wells Fargo asserted that E*Trade was obligated to, but did not, ensure that the transfer forms it submitted to Wells Fargo were accurate and contained authentic signatures. According to the Award, it was alleged that the signatures contained on the ACAT forms were forged by Robert Kevin Strayn.

The panel found Wells Fargo and E*Trade liable and awarded Ms. Strayn compensatory damages of $50,253 from Wells Fargo and $33,502 from E*Trade; interest in the amounts of $7,176 from Wells Fargo and $4,784 from E*Trade; and attorneys’ fees in the amounts of $13,500 from Wells Fargo and $9,000 from E*Trade. The firms’ cross claims were both denied.

The arbitrators did not provide a rationale for their decision.

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