Stock broker John Schmidt of Dayton, Ohio was recently fired by Wells Fargo Advisors Financial Network, LLC and suspended by the Financial Industry Regulatory Authority (FINRA) following allegations of “unauthorized money movement[s]” in his customers’ accounts. Schmidt is also involved in two customer disputes relating to allegations that he misappropriated client funds. If Schmidt fails to cooperate with FINRA’s investigation into these matters on or before March 9, 2018, his suspension will automatically convert to a permanent bar.
Depending on the facts involved, Wells Fargo Advisors may be liable for Schmidt’s alleged misconduct. In some cases, courts have held that broker-dealers are liable under principles of respondeat superior (strict liability against employer for employee’s actions) when their registered representatives misappropriate client funds. See Henricksen v. Henricksen, 640 F.2d 880, 887 (7th Cir.1981), cert denied, 454 U.S. 1097 (1981); Alvarado v. Morgan Stanley Dean Witter. Inc., 448 F.Supp.2d 333 (D.P.R. 2006); As You Sow v. AIG Financial Advisors, Inc., 584 F. Supp. 2d 1034 (M.D. Tenn. 2008). The rationale for imposing derivative liability in these circumstances is simple: “A contrary rule would cause injury unfair to the investing public.” As you sow, supra.
If you have suffered losses as a result of the malpractice or misconduct of John Schmidt and/or Wells Fargo Advisors, we may be able to assist you in recovering some or all of your losses. Call us toll free at 888-607-4819 for a free, no-obligation consultation and evaluation of your case.