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A Wells Fargo advisor has been granted expungement of a customer complaint alleging unsuitability and a failure to mitigate losses in an investment account, according to an arbitration decision published this week by the Financial Industry Regulatory Authority.
Scottsdale, Arizona–based Henry Krich, who has been with Wells Fargo Advisors since 2015, had been managing an account for “a fairly sophisticated investor,” a trial attorney with years of investing experience who also maintained self-directed investing accounts, according to an arbitration decision published by Finra this week.
In his statement of claim, the customer contended that Krich did not implement adequate “protection” in the account, resulting in about $150,000 in losses. The arbitrators’ decision does not further detail the complaint’s specifics but notes that Wells settled the claim by paying $75,000.
Based on the statement of claim, correspondence records and Krich’s testimony — the customer did not attend the hearing — arbitrators Will Murphy, Steven Ainbinder and Carl Joseph Domino found “no act or omission … that could form the basis of a valid complaint.”
The arbitrators noted that Krich recommended loss-mitigation strategies such as options, stop-loss orders and liquidation, and they further noted that the customer rejected the use of stop-loss orders, fearing that he would miss out on profits to be made during a recovery.
The arbitrators also noted that the customer occasionally availed himself of the liquidation option but often quickly reinvested the proceeds, sometimes the same day. The matter escalated until Krich received an overnight email in which the customer demanded to “Sell everything NOW!” Krich complied, cashing out the account’s holdings the next day, despite a huge market drop, according to the arbitrators.
The arbitrators concluded that the claim lacked merit.
“There is simply no act or omission of Claimant [Krich] that could form the basis of a valid complaint against him. The claim made was false, and there is no value to the investing public in keeping the incident on Claimant’s record,” the arbitrators wrote in granting expungement.
Per standard procedure, the expungement will be effected after Krich obtains judgment from a court of competent jurisdiction. Krich did not respond to FA-IQ’s request for comment, but the arbitrators noted that he opposed Wells’ settlement of the customer’s complaint. In a response posted to his BrokerCheck record in 2020, Krich asserted that the complaint was settled “to avoid the expense and distraction of further arbitration.”
Krich’s record has one other customer dispute: an unsuitability allegation in 2010 that was denied.
Krich first registered in 1999, at Equity Services, per BrokerCheck. He has also been registered at Banc One Securities, Chase Investment Services and JPMorgan Securities.
