Arbitrators Gave Merrill Broker a Victory that Courts Denied Him
The Merrill Lynch broker who won an arbitration decision last week to clear his regulatory record of seven customer complaints didn’t quite get the victory he anticipated when he began fighting for expungement in July 2013.
Patrick J. Dwyer, Barron’s top-ranked advisor in Florida for four of the last eight years, sued the Financial Industry Regulatory Authority in a California state court four years ago in an effort to rid his Central Registration Depository record of the complaints that had accumulated between 2001 and 2009. Only one went to arbitration and only one separate complaint that dated back to 2001 resulted in a monetary settlement.
The case gained notoriety because Dwyer sued Finra in July 2013 under the name John Doe, and pressed the court to list him in legal captions under the alias, in an apparent attempt to avoid alerting clients and prospects of the complaints or his efforts to obscure them.
The then-anonymous broker was criticized for attempting to undermine the prophylactic disclosure intents of the CRD and of the public judicial system. His identity was ultimately revealed in an expose accusing him of venue shopping by filing under liberal California county court rules almost 3,000 miles from his home base in Miami.
The Merrill Private Banking and Investment Group broker ultimately lost his court battle in 2015 when a California judge ruled that he failed to prove his assertions that the complaints were baseless. But he won victory for his cause, if not his anonymity, last week.
The three-person arbitration panel convened under the auspices of Finra gave Dwyer the expungements he long sought. He demonstrated a “strong grip on the underlying facts” in arguing that the customer complaints were largely baseless, the arbitrators wrote in their award document. They also noted that Dwyer picked up all the costs of his efforts and suggested that his sojourn through the courts before going to arbitration simply reflected his ignorance of the expungement process.
Neither Dwyer nor his lawyers — Jeffrey K. Riffer in the court case and Jeffrey Sonn in the arbitration — responded to requests for comment on why he so ardently pursued the expungement issue.
One former colleague said Dwyer was concerned that his rankings in “top advisor” polls could be jeopardized if publications strengthen their listing qualification criteria by weighting complaints more strongly into determination of their largely asset-based rankings. Dwyer’s website boasts of his numerous “Barron’s,” “Forbes,” “Financial Times” and “Registered Rep” honors. Forbes most recently listed his two-person practice as managing $2.7 billion of customer assets while Barron’s credited the team with $2.5 billion.
A Merrill spokeswoman declined to comment.
A spokeswoman from Finra also declined to comment on the initial court case or on the recent arbitration outcome.
Several lawyers who represent brokers and customers said they are sympathetic to brokers’ concerns that unsubstantiated complaints publicly available in court, regulatory and press reports can sully advisors’ reputations with clients, prospects and other personal and professional acquaintances. But they said expungement and carefully crafted disclosure language can ameliorate the issue.
“It’s important that there is consistency in the public’s right to know, and if the reports aren’t accurate there are remedies,” said Phil Aidikoff, a securities industry lawyer in Los Angeles. “If complaints are dropped, brokers can point to it or get expungement. If there are awards that they didn’t contribute to they can [point to language on the CRD and BrokerCheck records that] tells the world they did nothing wrong, but the notion of managing the cases by not disclosing a name is troubling.”