{"id":5289,"date":"2012-04-05T00:00:00","date_gmt":"2012-04-05T05:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2012\/04\/merrill_lynch_to_pay_brokers_o"},"modified":"2022-03-09T16:13:56","modified_gmt":"2022-03-09T22:13:56","slug":"merrill-lynch-to-pay-brokers-o","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/merrill-lynch-to-pay-brokers-o\/","title":{"rendered":"Merrill Lynch to Pay Brokers Over $10M for Alleged Fraud Over Deferred Compensation Plans"},"content":{"rendered":"

A Financial Industry Arbitration panel has ordered Merrill Lynch (BAC) <\/a>to pay over $10 million to two brokers who claim the financial firm wrongly denied their deferred compensation plans to vest. Per the FINRA arbitration panel, senior management at Merrill purposely engaged in a scam that was \u201csystematic and systemic\u201d to prevent its former brokers, Tamara Smolchek and Meri Ramazio, from getting numerous benefits, including the ones that they were entitled to under the financial firm\u2019s deferred-compensation programs, so that it wouldn\u2019t be liable after the acquisition. The panel accused Merrill of taking part in \u201cdelay tactics\u201d and \u201cdiscovery abuses.\u201d <\/p>\n

Some 3,000 brokers left Merrill after Bank of America Corp. (BAC)<\/a> acquired it in 2008. A lot of these former employees are now claiming that they were improperly denied compensation.<\/p>\n

Smolchek and Ramazio alleged a number claims related to their deferred compensation plans\u2019 disposition. Causes of action against Merrill included breach of duty of good faith and fair dealing, breach of contract, breach of fiduciary duty, unjust enrichment, constructive trust, conversion, defamation, unfair competition, tortious interference with advantageous business relations, violating FINRA Rule 2010, fraud, and negligence. <\/p>\n

Broker employment contracts usually mandate that an employee stay with a financial firm for several years before they are entitled to vest the money they are earning in their tax-deferred accounts. However, several of Merrill\u2019s deferred compensation programs allow brokers that have left the firm for \u201cgood reason\u201d to have their money vest. <\/p>\n

The FINRA panel expressed shock that after the departure of 3,000 Merrill advisers following the Bank of America acquisition, the firm did not approve a single claim for vesting that cited a \u201cgood reason\u201d under the deferred compensation programs. Per Merrill\u2019s own analysis, had it approved the vesting requests, the financial firm might have paid anywhere from the hundreds of millions to billions of dollars in possible liability. <\/p>\n

Per the compensation ruling, Merrill has to pay Ramazio $875,000 and Smolchek $4.3 million in compensatory damages for unpaid deferred compensation, unpaid wages, lost wages, lost book, lost reputation, and value of business. The FINRA panel also awarded $1.5 million in punitive damages to Ramazo and $3.5 million to Smolchek.<\/p>\n

The same day that the decision was issued, Merrill filed an appeal. The financial firm wants the ruling overturned, claiming that it never received a fair hearing and that panel chairwoman Bonnie Pearce was biased. Merrill contends that Pearce did not disclose that her husband is a plaintiff\u2019s lawyer who sued the financial firm for customers and brokers in at least five lawsuits. Merrill is accusing Pearce of \u201covert hostility.\u201d<\/p>\n

Merrill Lynch Loses $10 Million Compensation Ruling<\/a>, The Wall Street Journal, April 4, 2012 \n <\/p>\n

Merrill Lynch Savaged by FINRA Arbitrators in Historic Employee Dispute,<\/a> Forbes, April 4, 2012 <\/p>\n

\nMore Blog Posts: <\/strong>
\nSecurities Claims Accusing Merrill Lynch of Concealing Its Auction-Rate Securities Practices Are Dismissed by Appeals Court<\/a>, Stockbroker Fraud Blog, November 30, 2011<\/p>\n

Merrill Lynch Faces $1M FINRA Fine Over Texas Ponzi Scam by Former Registered Representative<\/a>, Stockbroker Fraud Blog, October 10, 2011<\/p>\n

Merrill Lynch, Pierce, Fenner & Smith Ordered to Pay $1M FINRA Fine for Not Arbitrating Employee Disputes Over Retention Bonuses, Institutional Investor Securities Blog, January 26, 2012 <\/p>\n

Continue Reading \u203a<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

A Financial Industry Arbitration panel has ordered Merrill Lynch (BAC) to pay over $10 million to two brokers who claim the financial firm wrongly denied their deferred compensation plans to vest. Per the FINRA arbitration panel, senior management at Merrill purposely engaged in a scam that was \u201csystematic and systemic\u201d to prevent its former brokers, […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3953,3752,3800],"tags":[],"class_list":["post-5289","post","type-post","status-publish","format-standard","hentry","category-arbitration-rulings","category-financial-firms","category-merrill-lynch"],"yoast_head":"\nMerrill Lynch to Pay Brokers Over $10M for Alleged Fraud Over Deferred Compensation Plans — Investor Lawyers Blog — April 5, 2012<\/title>\n<meta name=\"description\" content=\"A Financial Industry Arbitration panel has ordered Merrill Lynch (BAC) to pay over $10 million to two brokers who claim the financial firm wrongly denied — April 5, 2012\" \/>\n<meta name=\"robots\" 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