A Cambodian-American broker who accused Wells Fargo of discrimination won approval from FINRA arbitrators to delete "false and defamatory" statements by the firm from his record.
Under a Dec. 23 award by a San Francisco-based panel, Steve Hour Heng secured permission for expungement of an allegation by Wells Fargo Clearing Services, the parent company of Wells Fargo Advisors, that six cash withdrawals from his personal bank account over a month "were each made in an amount to avoid currency transaction reporting requirements." The parties had agreed days earlier to a partial settlement of the rest of Heng's case, which alleged that the firm discriminated against him and wrongfully terminated him in April 2020. Wells Fargo had, in turn, accused him of owing the firm more than $1 million on his bonus loans.
Because of the typical lack of detail in the award document, it's not possible to tell "what came of the competing claims for money damages," attorney Robert Herskovits of Herskovits PLLC said in an email. Wells Fargo's explanation of the termination on BrokerCheck "was pretty ugly," said Herkovits, who represents brokers in expungement cases but wasn't involved in this case.
"Disclosure of that nature would trigger an investigation by FINRA," Herskovits said. "And if [Wells Fargo] was correct — i.e. the [financial advisor] was structuring deposits — FINRA would seek to bar the individual. Since there is no indication that FINRA has taken any action against Mr. Heng (and more than 2.5 years have passed since the U5 was filed), I am assuming that WF's disclosure was dubious. It certainly seems like the arbitrators thought little of WF's determinations."
The industry's track record
Representatives for Wells Fargo Advisors, which agreed in 2017 to pay $35.5 million to settle a discrimination lawsuit filed by Black financial advisors, declined to comment on the case. The language of the new BrokerCheck disclosure that the panel recommended to replace Wells Fargo's amendment on Heng's record states that "local management opposed the termination decision but were overruled by the firm."
Heng, who is a military veteran, and his attorney didn't respond to requests for comment.
The nearly 30-year advisor who started his career with Merrill Lynch while on active duty in the U.S. Army now works out of the Roseville, California-based branch of Baird as a member of the Heng, Allen and Vonhof Group, according to his company bio. His family escaped Cambodia during the final stages of the Vietnam War in 1975 when he was 10 years old and "arrived as refugees to Tracy, California, with no knowledge of the English language," the bio said. Heng eventually gained a bachelor's degree in biological sciences from the University of California, Davis and became a second lieutenant in the Army.
Heng's award is the latest case to offer a murky lens onto industry workplace practices. A month earlier, two Black advisors dropped a discrimination lawsuit against Merrill that may have been resolved in a confidential settlement . Last June, a former Citigroup financial advisor who accused the firm of being a "boys club" won an award of more than $1.4 million in compensatory damages plus interest and attorney fees . Like other minority groups in wealth management, many Asian American advisors have built successful careers and businesses while also pointing out the lingering barriers in a field that remains predominantly white and male.
The involvement of a defamation claim represents another common theme in arbitration cases , in which brokers often accuse their former firms of tarnishing their names publicly as a means of adding complications to their transition and scaring other advisors from leaving the fold. Such cases can take years to resolve and cost up to hundreds of thousands of dollars in legal fees .
Heng's case revolved around the formal reasons that Wells Fargo filed papers for his exit from the firm after 23 years, although the award document didn't reveal the details of the alleged discrimination. Firms that terminate brokers must file an amendment to their permanent record on FINRA's Form U5, which eventually makes its way to their BrokerCheck page. Heng's record will display Wells Fargo's allegations relating to his personal cash withdrawals until he sends a copy of the award to FINRA's Credentialing, Registration, Education and Disclosure Department for review, according to the arbitration award last month. It's not clear what prompted the firm's review of the cash withdrawals or which laws or rules it suspected Heng of breaking.
Heng "made six cash withdrawals from his personal bank account on six separate days in December 2019," the disclosure stated. "The firm determined the withdrawals were each made in an amount to avoid currency transaction reporting requirements. The [financial advisor] disputes the determination. This activity was not securities- or client-related. No client harm was indicated by the firm's internal review."
In a case filed about a year after his exit from Wells Fargo, Heng accused the firm of discrimination based on race or national origin, wrongful termination, blacklisting, intentional interference with a prospective economic advantage and violation of a California state law prohibiting "unfair" or fraudulent business practices. Wells Fargo denied the allegations, and Heng denied the firm's allegations that he breached the terms of three promissory notes. Wells Fargo filed a counterclaim seeking damages of $1.2 million in unpaid balances, plus interest.
With the exception of Heng's request for expungement of his record, each side dismissed their cases on Dec. 20 "with prejudice," meaning they won't be allowed to file the claim again. Other than stating that Heng filed a notice of partial settlement of his claims against Wells Fargo, the award omitted any information about the financial terms of the agreement. Such settlements often include provisions forbidding the parties from discussing them publicly.
The panel's decision to grant the expungement request provided some clues about the tensions surrounding Heng's departure from his prior brokerage, though. The arbitrators ordered his FINRA language to be replaced with a new disclosure on BrokerCheck stating that the firm alleged the cash withdrawals from Heng's account violated the rules.
"The withdrawals did not violate laws or regulations, and the firm's allegations were false and defamatory," according to the award. "The [financial advisor's] local management opposed the termination decision but were overruled by the firm. The FA did not receive any personal financial benefit from the transactions. This activity was not securities- or client-related. No clients were harmed by the transactions."