Elderly Merrill Customer Sues Over Broker’s Liquor Store Recommendation
An 80-year-old Florida man has sued Merrill Lynch for failing to supervise a broker who allegedly convinced him to pour almost $5 million of his and his ailing wife’s retirement savings into a failing liquor store in Key Biscayne.
Sonville allegedly worked closely with Tarajano’s son, who received the ownership stake, to “pilfer the accounts Merrill Lynch was managing,” according to the complaint. It also alleges that the broker’s cousin received a commission for the liquor store sale.
The suit, filed last month in state court and moved to federal court in the Southern District of Florida on Tuesday, accuses Merrill of negligence in failing to monitor suitability and know-your-customer rules, breach of fiduciary duty, and breach of contract in addition to the supervisory failure.
“[H]ad sufficient supervisory rules and procedures been in place, the ‘selling away’ of Plaintiffs’ entire holdings to fund a failing liquor store would have been prevented,” the complaint said.
A spokesman for Merrill Lynch said the firm just received the complaint and is reviewing it but will attempt to move it to an industry arbitration forum, as required contractually under most customer account agreements.
Sonville, who has worked at Merrill for all of his 25-year brokerage career, noted that he was not named as a defendant and declined to comment on whether he had disclosed his interest in the business to the firm.
“The parties involved are dealing with it,” Sonville said.
His BrokerCheck record indicates a $4 million damage claim filed last month that corresponds to the liquor store investment and a single other disclosure—a 1998 customer claim of failing to execute an order that Merrill settled for $6,000. Sonville denied receiving the order, according to the database
The lawsuit refers to Tarajano’s “advanced age” and to his role as trustee for his wife, who is suffering from Alzheimer’s disease. The Financial Industry Regulatory Authority and state securities regulators have stepped up warnings about elder abuse cases.
Finra’s enforcement division also has pressed a growing number of actions against registered reps for conducting outside business activities without their firms’ permission.