Star Merrill PBIG Broker Sweeps His Record Nearly Clean
(Corrects total assets that Dwyer manages, according to Forbes, to $2.7 billion, not $5.5 billion.)
A Florida broker who markets himself as a pioneer in Merrill Lynch’s private banking and investment group for ultra-rich clients has won a sweeping victory from arbitrators who have authorized removal from his publicly available regulatory record of a slew of what they determined were spurious customer complaints.
Patrick J. Dwyer’s red-splotched BrokerCheck history will be cleaned of all seven customer complaints filed between early 2001 and mid-2009, six of which were denied or closed with no action taken, according to an award filed on Thursday by a three-person Finra arbitration panel. An eighth complaint charging unsuitable investment recommendations related to private placements was filed last month and not considered in the expungement claim that Dwyer initiated last September.
The victory of Dwyer, whose mutibillion-dollar practice in Miami has put his two-advisor team in the upper tier of Barron’s and Forbes magazines “top broker” lists, heartens lawyers who specialize in bringing expungement cases to arbitrators.
Some brokers have been questioning the value of pursuing expungements, given uncertain outcomes and costs. Others believe that the growing prominence that regulators have put on BrokerCheck as a customer-protection tool makes expungement an important marketing tool.
Dwyer, whose website says he runs “one of the four largest advisory teams at Merrill Lynch worldwide” and knows “how to help ultra high net worth clients whether we recommend where to purchase an aircraft or help them buy a home in France,” did not return a call for comment on what motivated his expungement quest.
The arbitrators accepted his testimony that he “waited so long to seek expungement relief” because he was unaware of his ability to challenge the allegedly inaccurate reporting on his Central Registration Depository records under Finra rules, they wrote in the award document. They also noted that the only complainant who went so far as to file an arbitration claim did not challenge Dwyer’s expungement request.
“Once claimant became aware of his ability to seek expungement relief through Finra, he spoke with several law firms before retaining counsel,” according to the award document, which noted Dwyer’s request that he be assessed for all costs associated with the arbitration hearings. In addition to his lawyers’ fees, he was billed $3,375 for hearing fees while Merrill, which supported his expungement request, was charged $5,650 in member and processing fees.
Jeffrey Sonn, whose Aventura, Fla. law firm represented Dwyer, did not return a call for comment.
Dwyer, who Forbes ranked as #5 on its 2016 Top 200 wealth managers list with $2.7 billion of assets under management, demonstrated a “strong grip on the underlying facts” and presented “a substantial number of documents” supporting his testimony, the arbitrators wrote. Forbes says it requires advisors to demonstrate an “acceptable compliance record.”
Arbitrators devoted five pages of the award document toward demolishing what they characterized as mostly false and erroneous claims from Dwyer’s customers, including one made during the financial crisis in 2008 for damages of $6.8 million related to his alleged failure to liquidate a portfolio according to a customer’s timing instructions.
“In response to the customer missing a rally in the market, on October 10, 2008, the customer demanded a significantly large interest-free loan, as well as payment of the money his account would have earned had his portfolio not been liquidated,” the arbitrators wrote, accepting Dwyer’s testimony that he followed the customer’s orders.
One of the most serious complaints involved investments in Merrill’s highly concentrated Focus 20 growth stock fund in 2001 after a woman insisted, against Dwyer’s recommendation, that he become “more aggressive” with on of her charity-oriented accounts to achieve returns that rival brokerage firms were advertising.
The fund tumbled during the dot-com bubble amid allegations that Merrill published falsely optimistic research reports. The customer filed an arbitration claim against the firm, but not against Dwyer, seeking $255,000 in damages.
“The [arbitration] panel found that [Dwyer] was not aware, nor could he have been aware through reasonable investigation, of the alleged improprieties of the Focus 20 Fund, the alleged optimistic research….or the fact that the prices of the funds were allegedly inflated,” the award document said. “The panel also found that the investment was suitable for the customer” given her demand for more aggressive investment returns.
Dwyer has spent his entire career at Merrill, beginning with a stint in its MBA Analyst Program, and “clients have been able to reach him at the same telephone number for more than 23 years,” his website asserts. He’s also proved to be a loyal soldier to the firm.
“The best thing that ever happened to my practice was that Bank of America acquired Merrill Lynch,” he told Forbes last year. The bank “greatly enhanced his ability to offer lending solutions to clients in need of a liquidity valve, or in search of financing for asset purchases ranging from jets to ski houses and turnaround real estate properties,” the magazine wrote.