Merrill Lynch Fined For Involvement In Puerto Rico Bond Fraud Case
In a recent award, a Financial Industry Regulatory Authority (FINRA) arbitration panel has decided that Merrill Lynch must pay a former professional baseball player and his wife $1.7 million in compensatory damages, plus $88,758 in costs, for losses they sustained from investing in Puerto Rico bonds and closed-end bond funds.
The retired MLB player is Angel Pagan and his wife is Windy Pagan, a former Ms. Puerto Rico. Angel was an outfielder for the NY Mets, the Chicago Cubs, and the San Francisco Giants before retiring to live on the island.
The couple invested $3.3M in the Puerto Rico bonds at the recommendation of their Merrill Lynch broker, Alex Jose Gierbolini (Gierbolini), who previously worked at UBS Financial Services of Puerto Rico (UBS). UBS has been the subject of thousands of investor claims for losses sustained when the Puerto Rico bonds and closed-end bond funds plunged in value beginning in 2013. It was while Gierbolini was a UBS financial representative that he sold to the Pagans the majority of their bonds.
Gierbolini continued to work with the couple when he moved to Merrill Lynch in 2012. They contend that Merrill Lynch and Gierbolini disregarded red flags indicating that the Puerto Rico bonds were headed downward. This left the Pagans’ portfolio overexposed.
The Pagans alleged a number of causes of action, including:
- Gross negligence
- Breach of fiduciary duty
- Breach of the duty of due care
- Breach of contract and the covenant of good faith and fair dealing
- Common law fraud and deceit
- Failure to supervise
- Control person liability
The Award also includes 4.5% in yearly interest from 6/20/17 through to the date the award was granted. Resulting in the total awarded amount being almost $2 million.
Merrill Broker Gierbolini the Subject of Two Dozen Customer Disputes
While Gierbolini is not a respondent, in this case, he has been the broker of record in 24 customer disputes, most of them having to do with recommending Puerto Rico securities to clients.
At Shepherd Smith Edwards & Kantas (SSEK Law Firm), our Puerto Rico bond and closed-end bond fraud attorneys have been investigating complaints brought by former customers of Alex Gierbolini from his time as a broker for Merrill Lynch and UBS.
Gierbolini was also previously a broker with Dean Witter Reynolds and Popular Securities, the latter being another firm that has been the subject of numerous Puerto Rico investor fraud claims related to the Commonwealth’s bonds.
Puerto Rico Investments
Thousands of investors suffered massive and life-altering losses beginning in late 2013 when the Puerto Rico bonds and closed-end bond funds they were sold lost significant value. Customers who were harmed included retirees, small business owners on the island, and investors on the mainland. Many of these investors were blindsided, never having been fully apprised of the risks they were taking on.
In quite a number of cases, the investors were unaware that investing in Puerto Rico bonds or funds was unsuitable for their portfolio.
Brokerage firms and their registered representatives have a duty to make sure that they only make investment recommendations that are appropriate for customers and in their best interests. They also must inform the investors of all the risks.
Puerto Rico Investment Fraud Attorneys
Merrill Lynch, UBS, Popular Securities, Santander Securities, Stifel, Nicolaus & Co.(SF), and Barclays (BARC) are just some of the broker-dealers whose registered representatives sold Puerto Rico bonds and closed-end bond funds to customers.
SSEK Law Firm has been hard at work, pursuing claims against these firms on investors’ behalf. Contact us today for a free, no-obligation consultation if you are one of these investors so that our Puerto Rico investment fraud attorneys can help you explore your legal options.