Wells Fargo Appeals Arb Ruling Struck Down in Court

Further Edmiston said, Wells Fargo's "argument that 'FINRA scrupulously followed its rules' regarding its strike list appointment process is an overstatement of the facts. Wells Fargo's attorney made a voluntary admission of the agreement or 'understanding' he had with FINRA that certain arbitrators would not appear on his strike lists. Such agreements or understandings to exclude arbitrators from strike lists do not appear in the FINRA rules as a method."

Wells Fargo also argues in its appeal that the judge violated the Federal Arbitration Act.

"If trial courts are permitted essentially to apply de novo review to an arbitrator's discretionary decisions and substitute their own judgment for those closest to the issues, the entire arbitration process will be rendered useless," Wells Fargo's complaint states. "Put simply, the trial court's decision removes all of the benefits of arbitration and has the effect of discouraging arbitration agreements — exactly the opposite of what the FAA was intended to accomplish."

Wells Fargo continued: "Consistent with the Congressional mandate in the FAA and the case law construing it, the parties freely bargained to resolve their disputes in an arbitration that would not be second guessed in court. The trial court's legal errors destroyed that bargain — thus undermining the well-established policy in favor of both arbitration and freedom of contract."

Wells Fargo said on Feb. 25 that it is appealing Edwards' ruling.

FINRA said on Feb. 18 that it is ordering an independent review of the arbitration decision in favor of Wells Fargo that Edwards had thrown out.

FINRA has hired the Lowenstein Sandler law firm to review how FINRA Dispute Resolution Services complied with its rules, policies and procedures for arbitrator selection in the proceeding, in which a panel denied an investor's claim against Wells Fargo.