Wells Fargo Seeks $2.1 Million from ‘Bada Bing’ Broker
Wells Fargo Advisors has filed in bankruptcy court for $2.1 million of a signing bonus it is trying to reclaim from an advisor who allegedly lied about his outside business and lending activities.
Aaron Parthemer, a broker who managed $250 million of client assets at a Wells branch in Fort Lauderdale, Fla., used the bonuses to fund activities that violated securities law and the bank-owned broker-dealer’s internal policies, Wells argued in a filing Friday in U.S. Bankruptcy Court in the Southern District of Florida.
The case puts in high relief the dangers of overlooking a high-producing broker’s past in order to bring assets in-house, Parthemer has argued in a related arbitration filing before the Financial Industry Regulatory Authority.
Wells alleges that Parthemer is using bankruptcy to avoid repaying the $2.1 million, should it prevail with its arguments in the arbitration proceeding.
Wells Fargo Advisors hired Parthemer from Morgan Stanley in October 2011. It paid him an upfront recruiting bonus of about $1.5 million and another $600,000 in a promissory note that amortized over nine years, according to Wells’s court complaint. Morgan Stanley also has filed a Finra arbitration seeking $520,000 from the advisor, according to his bankruptcy filing.
Wells’ arbitration proceeding was stayed indefinitely when Parthemer filed for bankruptcy in November 2015. Wells wants the court to ensure that it will be able to collect the full $2.1 million plus interest and attorney fees, according to its filing with the bankruptcy court.
“[Parthemer] was unequivocally aware of the misrepresentation at the time he accepted employment with WFA and entered into the promissory notes,” the Wells Fargo Advisors filing said. “It was [his] intent to defraud WFA out of $2.1 million so that he could continue funding personal investment activities at minimal costs.”
Finra barred Parthemer for life from the securities industry last year for failing to disclose his involvement in managing Club Play, a now defunct Miami Beach nightclub that was owned by several professional athletes who were also his clients.
The broker loaned the athletes almost $400,000 for the venture and also referred some clients to invest $3 million in a friend’s startup internet branding company, Finra said. It did not name the athletes.
Parthemer agreed to the bar without admitting or denying Finra’s findings. But in an arbitration counterclaim filed last August, he said his involvement in the nightclub was well-known locally and that his managers should have know about the possibility of regulatory and legal issues.
Shortly after he was hired, Parthemer was served with a civil lawsuit touching on some of the issues relating to the regulatory investigations. His branch manager told him not to worry about it. “[A]ll successful businessmen get sued at some point in their career,” the manager told him, according to his arbitration counterclaim.
Parthemer’s team generated about $4 million in revenue for Wells during his employment from October 2011 through April 2015, according to his arbitration counterclaim.
Since Parthemer’s bar was imposed, three Wells customers have filed complaints against him, according to his BrokerCheck report. One seeks almost $5 million in damages for recommending investments that the client alleges were not authorized by the firm.
Parthemer’s bankruptcy attorney, Jordan Rappaport of an eponymous law firm in Boca Raton, Fla., did not respond to a request for comment.