A Wells Fargo adviser who claimed she was unjustly fired from First Citizens Bank has won a startling $985,000 FINRA arbitration award from her former employer.
Elizabeth Dale Stancil, once a senior financial adviser and top producer in First Citizen's brokerage unit in Smithfield, N.C., was dismissed in March 2014 for allegedly making unauthorized bonus payments to her two sales assistants totaling $9,000, according to a brief filed with FINRA.
Stancil, however, claimed that she had in fact discussed the bonuses with two managers. One of the managers allegedly told her that other senior financial advisers had given bonuses to their assistants and that bonuses could be paid either through the bank's payroll system or by Stancil directly.
Stancil paid the two assistants $4,500 each by personal check or in cash.
"Both managers had given her the green light to pay the bonuses," Stancil's attorney, Andrew Whiteman of Whiteman Law Firm in Raleigh, N.C., said in a telephone interview. "They thought it was a good idea."
First Citizens Bank vigorously denied having approved the bonus payments, insisting that Stancil decided to pay her assistants directly in cash in order to avoid having the bank deduct any taxes from their bonuses.
"For claimant to contend that she thought it was permissible to pay her assistants in cash under-the-table, without any contemporaneous recordkeeping, notice to, or approval from First Citizens, is simply absurd," the bank's attorney, David Jonson of Wyrick Robbins Yates & Ponton, said in his brief.
Stancil also claimed that the bank sullied her reputation by filing a Form U-5 statement that she said falsely accused her of violating the bank's code of ethics and FINRA rules. Stancil's attorney argued that nothing in the bank's code of ethics or compliance manuals prohibited advisers from paying bonuses to assistants.
Neither were any FINRA rules broken, as indicated on the Form U-5, Whiteman argued, noting that FINRA declined to take any action against her following an investigation.
"The punishment Ms. Stancil received is grossly disproportionate to any offense she committed, even if one accepts First Citizens' version of the facts," Whiteman wrote in his brief.
First Citizens contended that Stancil had in fact violated a FINRA notice to members prohibiting the payment of bonuses to unregistered individuals, as was the case with one of the sales assistants. It also argued that the bank's code of ethics prohibits employees from making cash gifts and requires employees to keep accurate compensation records.
"By making direct cash payments to her assistants, without any record-keeping or notice to First Citizens, claimant's unauthorized bonus payments jeopardized First Citizens' compliance with a host of regulations promulgated by the Department of Labor, the Internal Revenue Service and the Securities and Exchange Commission," Jonson said in his brief.
The hearing lasted seven and a half days, with both sides bringing in expert witnesses.
"The panel believed Beth's side of it and believed our experts' testimony that she hadn't violated company policy or the FINRA notice to members," Whiteman said.
Top 10 producer
Stancil joined First Citizens in 2000, shortly after graduating from Campbell University with an MBA degree. When she was dismissed, she was one of First Citizen's top 10 producers, generating over $1 million in revenue for the bank, according to Stancil's pre-hearing brief. She managed over $120 million in assets for approximately 1,100 customers, it noted.
While she received positive performance evaluations and received numerous sales awards throughout her career at First Citizens, she started to have disagreements with the new leader of the brokerage unit over the assignment of business and compensation, according to Whiteman.
"It seems that she ran afoul of the new president of the brokerage," Whitman said.
The bank denied that she was terminated because of any perceived ill will or "personal animus" she claimed the then-president harbored against her or to distribute her book of business to "less costly" advisers, as Stancil contended.
Stancil, who now works for Wells Fargo Advisors in Raleigh, N.C., did not return voice messages seeking comment.
Alleged $15 million loss in lifetime earnings
Whiteman argued that the bank's wrongful actions severely damaged Stancil's career and robbed her of an estimated $15 million in lifetime earnings. While she was able to find a new position with Wells Fargo Advisors almost immediately after she was terminated, she suffered a series of setbacks with state regulatory authorities. For example, the North Carolina Securities Division suspended her registration for a month, delaying the transfer of accounts from First Citizens to Wells Fargo.
"First Citizens intended to prevent, hinder and delay Ms. Stancil from securing employment with another firm and continuing her business. This was done so that First Citizens could retain Ms. Stancil's 1,100 plus customers and her $120 million in assets under management," Whiteman said in the filing.
When Stancil joined Wells Fargo, her income dropped to $67,000 from $334,000. Her production plummeted to $207,000, according to the brief.
In addition to being held liable for $985,000 in damages, First Citizens Bank was ordered to pay interest at an annual rate of 8% from the date of the award until it is paid in full.
The arbitration panel also recommended that Stancil's Form U-5 be amended and purged of statements it deemed defamatory.
"We strongly disagree with the panel’s decision but, given the limited options for appeal in a FINRA arbitration, we’re putting the matter behind us," said Barbara Thompson, a spokeswoman for First Citizens Bank.