The heated battle between Bank of America/found in favor of the brokers on Apr. 3, awarding them around $10 million; that same day Merrill filed a federal lawsuit in the Southern district of Florida to overturn that decision.and former brokers Tamara Smolchek and Meri Ramazio over unpaid deferred compensation continues to rage. The Financial Industry Regulatory Authority arbitration panel
More recently, Merrill has filed additional evidence in its case, according to attorney Patrick J. Burns, while Smolchek and Ramazio have filed opposition to this move, saying it impedes justice by “further delaying the confirmation of the award.”
According to Burns, of TheOffices of Patrick J. Burns, Jr., in Beverly Hills, Calif.: “In their opposition, the brokers quote Girard v. Aztec RV Resort, Inc., (S.D. Fla. Sept. 16, 2011):’“Supplements are to be used only for newly discovered evidence or information, or for new legal authority. In this regard, a party may file a supplement when, through no fault of the filing party, certain relevant materials were not in the party’s possession at the time that the party filed its motion, response, or reply.’ They then go on to point out that Merrill Lynch had three months to discover evidence for their suit, but ‘chose to file within one hour.’”
Bank of America responded that it has not technically submitted new evidence in the case, only filings related to “discovery” (which is essentially information that may or may not then be considered “evidence” in a case) and scheduling.
The outcome of this case matters because there are approximately 1,000 financial advisors who could seek unpaid deferred compensation from Merrill Lynch.
The FINRA panel originally said Merrill had fraudulently prevented the two brokers from collecting deferred compensation owed to them when they left after Bank of America’s takeover of the firm in 2008. A similar ruling came down in late 2010, when two brokers who had departed after BofA took ownership received $1.167 million for deferred compensation benefits that had been denied to them. Around 1,000 financial advisors left the firm in the wake of that acquisition and could seek deferred compensation from Merrill as a result.
The panel rebuked Merrill sharply, saying that “directly and indirectly” through its senior management, it “intentionally, willfully and deliberately engaged in a systematic and systemic fraudulent scheme to deprive Claimants of their rights and benefits under its Deferred Compensation Programs,” in order to avoid liability after the change in control of the firm in 2008. Merrill “made fraudulent misrepresentations and withheld important information” from the brokers and “used other retaliatory and coercive tactics” against them, the panel wrote.
But Merrill Lynch spokesman Bill Halldin says the panel was biased because the husband of the panel’s chair is an attorney who represents clients in disputes with Merrill and that the panel chair failed to disclose this fact. It also claims that the panel “displayed overt hostility to Merrill Lynch,” and that it refused to hear evidence relevant to the case.