Merrill Lynch Gets Popped For $880K By Finra Panel
A Financial Industry Regulatory Authority (FINRA) arbitration panel in New York on June 23, 2011 found Merrill Lynch liable to the Claimants and ordered them to pay them $880,000 in compensatory damages.
The claim that was filed in December 2009, asserted various causes of action including unsuitability, common law fraud, breach of fiduciary duty, breach of contract and failure to supervise, among other things in requesting compensatory damages in the amount of $1,700,000. The claim revolved around the Claimants’ investment in the Merrill Lynch Phil Scott Team Income Portfolio. The Phil Scott Team is a Merrill Lynch Wealth Management Team out of Bellevue, WA, anchored by Phil Scott who was recognized in Barron’s Top 100 Financial Advisors in 2010. According to the award and other articles related to the facts of the case, the primary Claimant in the case was a 90 year old widow who was in ill health. Apparently, 100% of her funds were placed in the Merrill Lynch Phil Scott Team Income Portfolio, which was composed of 100% equities making the single investment unsuitable for an elderly investor.
At the hearing, Claimants requested that sanctions be ordered against Merrill Lynch for the untimely production of documents in response to the Panel’s order to compel their production. The Panel granted the Claimants’ request and assessed fees for hearings on discovery against Merrill.
After the conclusion of the thirteen (13) day evidentiary hearing, the Panel took the case under advisement to consider all of the oral and documentary evidence prior to entering its award. The FINRA Panel concluded that Merrill Lynch was liable to the Claimants and ordered them to pay $880,000 in compensatory damages. In addition the compensatory damages awarded, the Panel assessed the entire $34,800 in forum fees of the arbitration against Merrill Lynch. (FINRA# 09-06762; John J. Baker, Natalie N. Baker and Harriet B. Baker v. Merrill Lynch, Pierce, Fenner & Smith, Incorporated).