Fired Merrill HR Manager in Ohio Wins Defamation Claim
(Updated with comment from Katt’s lawyer.)
A former Merrill Lynch human resources official who was fired for allegedly abusing her corporate credit card has prevailed in claiming the firm defamed her, a rare outcome in expense-account disputes between brokerage firms and employees.
An arbitrator on Tuesday granted Ashley E. Katt’s request to expunge from regulatory records Merrill’s assertion that it discharged her in November 2016 for conduct that included improper use of a corporate credit card for personal expenses, according to a posting on the Financial Industry Regulatory Authority arbitration awards website.
Katt, who worked at Merrill in Cincinnati for less than three years after stints at Raymond James and Fidelity Brokerage Services, asserted in her arbitration complaint filed in January that the language used by Merrill on its U5 termination form defamed her. Merrill asked the arbitrator to deny her claims and her request for the firm to pay her arbitration costs.
A growing number of advisors and managers at large brokerage firms have tripped over expense-account “benefits” in recent years, many of which involve business development accounts in which brokers set money aside pre-tax and then improperly submit claims.
Merrill in April ordered its brokers and client associate to take a course on expense policies and also revamped its expense-claim processes after calculating that 66% of submissions in the fourth quarter last year were erroneous.
The details of Katt’s alleged improprieties were not given in the arbitration award document. The sole public arbitrator on the case, David F. Barrett in Cincinnati, ordered Merrill to exonerate her by changing the explanation for her termination to: “At-will management team member terminated without cause during reorganization.” He ruled that each party was responsible to pay their forum fees.
Katt and Merrill reached a settlement over damage claims, said Katt’s lawyer, Thomas S. Sapinsley of The Lampe Law Office in West Chester, Ohio.
“We’re thrilled with the outcome,” he said, noting that he couldn’t discuss terms of the confidential settlement. “This was not a rollover [on Merrill’s part] by any means.”
Katt, whose LinkedIn profile said she was running human resources for 250 financial advisors overseeing $23 billion in Merrill’s Ohio Valley region, declined to comment on the expungement award.
Brokerage firms’ claims of expense account abuses are generally clear-cut and difficult for brokers to challenge, making the Katt decision appear to be a victory for employees, said Marc S. Dobin, a lawyer in Jupiter, Florida, who often represents brokers in employment disputes.
A spokesman for Merrill did not immediately return a call for comment.
Aside from the termination notice, Katt’s BrokerCheck history has no other disclosures of complaints or financial events.
Katt currently works as a “talent development manager” for an architecture firm in Cincinnati, according to LinkedIn.
She started her brokerage career at Fidelity in April 2009 as an operations branch lead, according to LinkedIn. She moved to Raymond James in 2013 as a branch operations manager in the Cincinnati area and took the H.R. post with Merrill the following year, it says.