A dispute between Wells Fargo and one of its former brokers involving promissory notes will now be heading into federal court, Advisor Hub reports.
The matter involves Hoss Esmaeili, who was a Wells Fargo broker in Raleigh, North Carolina before departing the firm in December 2019. An award issued by an arbitrator last month ordered Esmaeili to repay about $397,500 tied to two promissory notes. He signed one promissory note when joining Wells in 2017 for more than $227,300 and another the following year for $69,925.
Esmaeili is now challenging the decision in court in an effort to overturn the arbitration award, which was the outcome of a one-day hearing. In a petition filed in the U.S. District Court in the Eastern District of North Carolina, Esmaeili alleges that the arbitrator “refused to hear material evidence”, and that he was denied a thorough and fair review of the circumstances surrounding his departure from Wells Fargo.
Esmaeili contends he had no choice but to leave the firm due to its poor handling of the account of an elderly client that led to an unfavorable settlement for the client’s beneficiary after he died. In ruling against the ex-broker, the arbitrator explained that he did not find the handling of the account by Wells Fargo to have been deficient, and said that Esmaeili was obligated to pay the money back.
“While his reasons for leaving Claimant’s employ were valid, they did not excuse his duty to repay the notes,” the arbitrator wrote. “Having had the benefit of the funds over the ensuing years, he must now repay them.” Along with the repayment, Esmaeili was also ordered to pay $45,000 in attorney fees for Wells Fargo.
Esmaeili’s motion in court cites several factors that would justify vacating the award. “Based on the truncated hearing, the exclusion of critical evidence, and the arbitrator’s failure to meaningfully consider Mr. Esmaeili’s documented concerns, there is more than enough here to support vacating the Award,” the motion said.
Esmaeili’s lawyer, Kelly A. Cameron with Waldrep Wall Babcock & Bailey in Winston-Salem, North Carolina, did not respond to a request for comment. Esmaeili, who represented himself in the arbitration, also did not respond to a request for comment.
“Wells Fargo Advisors takes its commitment to protect investors seriously,” a spokesperson for the firm previously wrote in a statement. “We are pleased the arbitrator held him to his obligations.”
At Hyman Cotter PC, our attorneys have handled hundreds of arbitrations before FINRA, , the Chicago Board Options Exchange, the Chicago Board of Trade, JAMS, the American Arbitration Association and other self-regulatory organizations nationwide. We have also appeared in courts throughout the United States in various types of securities-related matters. For more information about our arbitration and litigation services, please contact us at 312-291-4600 or through our online contact form.
