Arbitrator Grants Ex-Merrill Bank Broker’s Expungement, Calls Firing ‘Reckless’

A veteran broker in Nevada has won expungement and $50,000 in damages after an arbitrator found that Merrill Lynch’s investigation and subsequent firing showed “reckless disregard for the truth,” according to an award issued last week.

The sole public arbitrator said that Merrill Lynch had failed to properly follow up after a customer who had “cognitive difficulties” complained that the broker, Colette E. Wigart, had opened a savings account at Merrill parent Bank of America without authorization. The firm did not interview the client despite indications that the client may have approved the account to hold proceeds from the sale of her house and later forgotten about the request, the arbitrator said.

“The failure of respondent to interview the client and accept the allegations at face value, despite her well-known memory impairment…demonstrates reckless disregard for the truth,” arbitrator Dean J. Dietrich wrote.

Wigart, who represented herself in the case, was authorized to change her U5 notice to say she was “permitted to resign” and revise the termination reason to reflect that she did in fact have the client’s permission, according to the award, which said the original U5 notice was defamatory.

Wigart, who has been registered as a broker for 26 years and joined Merrill in 2015 from Morgan Stanley in Incline Village, Nevada, did not return a request for comment sent through LinkedIn. She had been a financial solutions advisor, a bank-based broker who works from a call center or a Merrill branch and assists brokers in pitching banking products and other services, according to a source familiar with her practice.

In granting the damage claims, which equaled the entirety of what she had sought, the arbitrator noted that Wigart has not been able to secure a new job in the industry despite her industry experience and interviewing with a “number of banks.”

A Bank of America spokesman declined to comment on the termination.

The firm said in its August 2018 U5 notice that it had fired Wigart over “conduct involving improperly seeking to obtain compensation by opening a Bank of America savings account on behalf of a client without the client’s authorization.”

The arbitrator, however, shifted the blame to Merrill, noting that several former employees at Bank of America/Merrill testified that they were broadly encouraged to open new accounts for clients and that the policy for doing so was “ambiguous and not uniformly enforced,” Dietrich wrote.

Merrill, like its bank-owned wirehouse peers, has been leaning on client associates and bank associates who interface with wealthy clients as it looks to drum up sales of bank products at the brokerage unit.

The arbitrator, however, noted that no “reasonable person” would risk the “severe consequences” over the $700 that the client associate earned from opening the account.

Wigart’s case was also aided by the customer’s primary advisor who testified that he had to terminate his relationship with the customer, who had around $500,000 in assets, after she had separately complained about other unauthorized trades that she had in fact previously approved. The award did not identify the advisor or the customer.