Former Merrill Complex Manager Loses Stock-Loss Claim
Three arbitrators have dismissed another claim from a former Merrill Lynch manager who argued that company stock holdings he received as compensation plummeted and his options expired worthless as a result of fraud related to Merrill’s financial-crisis-era collapse.
Raymond George, a retired Merrill Lynch complex manager, filed his claim in May 2018. It is among more than 75 cases in which former executives and managers have sought hundreds of millions of dollars in punitive, compensatory and treble (anti-racketeering) damages for losses allegedly caused by Merrill’s ongoing coverup of the quality of risky mortgages packaged into securities that caused the firm’s financial collapse in 2008.
Merrill has succeeded in having about 18 claims dismissed, while about ten of its motions were denied and dozens of others are in various stages of litigation and arbitration scheduling, according to lawyers at Shumaker, Loop & Kendrick, which represented George and other plaintiffs.
George did not respond to a request for comment transmitted through his son, who is an advisor at a Morgan Stanley branch in Long Island.
In granting Merrill’s motion to dismiss the claim last Thursday, Tampa-based arbitrators Karl Vogeler, Richard Zaifert and Nicholas Castellano said George waited too long to make his May 2018 complaint and could not claim that the six-year filing limit should have begun in 2014 when Merrill parent Bank of America reached a nearly $17 billion settlement with the government over the alleged mortgage fraud.
“Claimant, as a sophisticated investor and industry executive, was on sufficient notice no later than 2009 that he may have a claim,” the arbitrators wrote, citing articles, books and other media reports about potential litigation against Merrill.
Jarrod Malone, a lawyer at Shumaker, Loop, said the law firm will continue to press claims from dozens of other former managers.
“This is more than a stock drop case” related to securities created in 2007, he said. “Merrill’s fraud extended and endured well beyond the events that caused the shares to lose value.”
A Merrill Lynch spokesman declined to comment on the George decision or on other claims from the former managers and executives.