District Court Confirms $10,250,000 Arbitration Award Against Merrill Lynch


The U.S. District Court for the Southern District of Florida confirmed an award in favor of two former financial advisers and against Merrill Lynch in the amount of $10,250,000. Merrill Lynch had petitioned the district court to vacate the award arguing, in essence, that the record of the arbitration proceeding demonstrated bias on the part of the chairwoman of the arbitration panel against Merrill Lynch. The district court examined the record and the law, found no basis to overturn the award, and, therefore, confirmed the award.

The Claimants alleged that Merrill Lynch breached its fiduciary duty and engaged in various forms of misconduct in connection with the termination of their employment following a change in control, including misconduct that deprived Claimants of their vesting rights under their deferred compensation plans.

The award against Merrill Lynch consisted of $5,150,000 in compensatory damages, $100,000 in discovery sanctions, and $5,000,000 in punitive damages.

The Panel’s award of discovery sanctions was based on the its determination “that [Merrill Lynch] hindered, disrupted and delayed this proceeding and undermined the integrity of this arbitration proceeding ion a manner that has prejudiced Claimants in their presentation of evidence.”

The Panel award punitive damages based on its finding that Merrill Lynch, through its Senior Management “intentionally, willfully and deliberately breached its fiduciary duty as the Deferred Compensation Plan Administrator to deprive Claimants of their vesting rights under the ‘ Plan in an arbitrary manner and in bad faith as part of a fraudulent scheme to avoid any liability under the [Plan] after the change in control in September, 2008,” in which Merrill Lynch became part of Bank of America.

The district court case is Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Tamara Smolchek and Meri Ramazio, United States District Court for the Southern District of Florida, Case No. 12-80355-CIV-MARRA/BRANNON. The FINRA arbitration case number is 10-04432.

Page Perry is an Atlanta-based law firm with over 170 years of collective experience maintaining integrity in the investment markets and protecting investor rights.