Arbitrators Dismiss Another Merrill Stock-Loss Case from Former Manager
(Updated with response from lawyers bringing the claims.)
A Finra arbitration panel has denied a former Merrill Lynch advisor’s claim for money lost in his deferred compensation Merrill stock holdings as a result of alleged fraud that led to the firm’s financial crisis-era sale to Bank of America.
Three arbitrators in Louisville, Ken., dismissed the claim submitted by Thomas Hirsch, now a complex manager with Raymond James Financial, on the grounds that the January 2019 claim missed Finra’s filing eligibility requirement, according to a decision Finra accepted on March 25. Finra requires claims to be made within six years of “events and occurrences” relevant to claimed losses.
The dismissal was at least the fourth granted this year to Merrill on filing period grounds.
Former Merrill retail brokerage head Lyle LaMothe lost his claim for hundreds of thousands of dollars earlier this month, former divisional manager Brian Sepe had his case dismissed in January and a Texas arbitration panel three weeks ago ended a claim from Charles R. Carson, a 20-year Merrill veteran now with RBC Wealth Management.
Lawyers Michael Taaffe of Shumaker, Loop & Kendrick in Florida and Carlsbad, Calif.-based lawyer Paul W. Thomas said in an e-mail that two arbitration panels last week denied Merrill motions to dismiss.
They have filed more than 75 arbitration claims on behalf of former Merrill managers and executives, many of whom they represented in a $13.6 million compensation settlement in 2016 involving managers who were terminated after the BofA takeover. Merrill has succeeded in having 17 cases fully or partly dismissed, the lawyers said, while 30 of its dismissal attempts have been denied and another three deferred pending additional hearing, the lawyers said.
Merrill spokesman Bill Halldin declined to comment on any of the cases, including last week’s Hirsch decision. Hirsch also declined to comment.
The lawyers represent the former Merrill managers on a contingency basis, meaning they are paid only if damages are awarded, some of the claimants have said.
In response to Merrill’s arguments that the claimants missed filing deadlines, the lawyers have argued that the Finra eligibility period did not begin until August 21, 2014. That is the day Bank of America reached a nearly $17 billion settlement with state and federal prosecutors who said Merrill misled investors about the quality of loans packaged into collateralized debt obligations and residential mortgage-backed securities that collapsed in the months leading up to the 2008-2009 financial crisis.
Taaffe and Thomas have previously said that they planned to appeal the arbitration dismissals, either by asking courts to take the rare step of vacating the decisions or by filing claims directly in court. They are preparing a federal court complaint for about $100 million on behalf of the estate of former Merrill western region director James Billington, Thomas said. An arbitration panel had dismissed the case on eligibility grounds without prejudice, meaning it can be re-litigated before a judge, the lawyers said.