Former Employees Believe Wells Fargo Used FINRA forms and Firings to Retaliate Against Them

November 17, 2016

News that Wells Fargo opened more than two million unauthorized deposit and credit card accounts has filled the headlines over the past few months. While There is no question that the customers were harmed by the bank’s unlawful sales practices, other victims have had their lives and livelihoods turned upside down in the scandal – innocent Wells Fargo workers who claim the bank used regulatory filings and other tactics as retaliation, jeopardizing their careers.

Of the more than 5,300 Wells Fargo employees and managers fired for creating fake accounts and other ethics violations, approximately 600 of them were registered with the Financial Industry Regulatory Authority (FINRA), an independent non-profit organization

responsible for regulating the securities industry. When a “registered representative” – a stockbroker, account executive, or other person licensed to sell securities – leaves a FINRA member firm under any circumstance, the firm must file notice using what’s known as form U5. Section 7 of the form requires the firm to disclose if the employee is or was “the subject of an investigation or proceeding” at the time of the termination.

According to released FINRA filings, 200 of the 600 fired registered representatives received negative comments on their form U5s, prompting members of the U.S. Senate Banking Committee to ask if the comments were accurate, and why the other 400 fired registered representatives escaped similar disclosures. Senators suspect that the bank purposely refrained from adding negative comments on terminated employees’ form U5s to deceive FINRA, the U.S. Securities & Exchange Commission, and other regulators from identifying patterns of fraud sooner than they did.

Senators also questioned if Wells Fargo used unfavorable U5 filings as a means of retaliating against employees who attempted to blow the whistle on the bank’s misdeeds. Many former employees believe that is precisely what Wells Fargo managers did — and, by doing so, damaged many innocent employees’ careers. According to The New York Times, “a negative comment on a U5 is a scorching mark that can make it almost impossible to find an other job in the banking field,” and Wells Fargo allegedly wields the form as a weapon “with little regard for the damage that inaccurate or imprecise allegations could inflict on people’s careers.” Once a negative form U5 is filed, the only way to wipe it clean is by going through a FINRA arbitration proceeding and having the U5 expunged, which is a challenging and onerous process.

Employees must be mindful of the power of a form U5 filing and raise, before the filing, any challenge they may have for the employer’s stated reasons for termination.

The Wells Fargo scandal is yet an other unfortunate example of corporate greed, and how honest employees at all levels of an organization can be targeted or scapegoated for taking a stand against unlawful policies and practices, or deceived into participating in wrongdoing. If you believe that a termination, demotion, or disciplinary action was motivated by fraud or retaliation, it’s critical that you speak with an attorney about your situation.

(*Prior results do not guarantee a similar outcome.)