Merrill Lynch Hit With Class-Action Complaint from Int’l Brokers
Frustrations over Bank of America Merrill Lynch’s decision last summer to restructure its unit of roughly 300 U.S.-based advisors serving international clients have reached a crescendo.
Three former Merrill Lynch advisors in the international unit filed a lawsuit on Friday seeking class action certification and accusing the firm of fraudulently misrepresenting that it was committed to the business while in reality it was seeking to sell the unit and instituting harmful and discriminatory policy changes, according to a complaint filed in U.S. District Court in the Western District of North Carolina where Bank of America is based.
The complaint does not specify total damages although it says the amount is in excess of $5 million and that the class would include over 100 brokers.
An attorney for the plaintiffs, Michael Taaffe of Shumaker Loop & Kendrick did not immediately respond to a request for comment. A spokesman for Bank of America also did not immediately respond to a request for comment Friday after business hours.
The three plaintiffs are Graciela Perez, her son, Jorge Perez, and Miguel Sosa. Graciela Perez and Jorge Perez, who managed $300 million in assets, resigned from Merrill Lynch in November 2015 and joined a small independent broker-dealer Bolton Global Capital in Miami. Sosa left in January and is now registered with Global Investor Services in Miami, according to Finra’s BrokerCheck.
The three advisors allege that the problems began after Merrill Lynch sold its offshore international business to Julius Baer in April 2012. Following the sale, the firm promised that it remained committed to the 300 U.S.-based advisors serving international clients.
In reality, Merrill Lynch last summer attempted unsuccessfully to sell the remaining domestic international business, the plaintiffs allege. It also “initiated numerous, harmful policy changes” prior to the Julius Baer sale through summer 2015 as part of its “Global Client Strategy” initiative, according to the complaint.
As reported, Merrill Lynch last summer restructured the unit, raising minimums, restricting international business to certain qualified advisors and limiting the number of countries it was willing to serve to 29. Those changes were mirrored more modestly at other major firms, such as Morgan Stanley Wealth Management. Others, such as RBC Wealth Management, exited international markets as stricter compliance and money laundering risks made it more difficult to serve clients abroad.
The Merrill Lynch advisors allege, however, that the firm’s changes were discriminatory, forced them to move their businesses and that the firm should not be able to recoup the remaining balance of promissory notes and bonuses that had not vested before their departure.
“Many financial advisors were forced to leave Merrill Lynch in order to preserve and service their international business and clientele,” the complaint says. “Such departing financial advisors were damaged through the loss of business, loss of opportunity, loss of unvested deferred compensation, paying back promissory notes prior to expiration of the term, emotional distress and other harms.”
The class would include all Merrill Lynch advisors and management personnel in the U.S. who served non-resident or international clients and are either currently employed or left the firm after April 17, 2012, according to the complaint.