Another Retired Merrill Vet Loses Retirement Plan Stock-Loss Claim


June 25, 2020

A Finra arbitration panel has denied another retired Merrill Lynch broker’s triple-damages claim for money lost in his deferred compensation Merrill stock holdings as a result of alleged fraud that led to its financial crisis-era sale to Bank of America.

Three arbitrators in Jacksonville, Fla., on Wednesday dismissed the claim for unspecified compensatory and punitive damages submitted by Charles Ross, who retired as a managing director in 2000 after more than 30 years with Merrill in New York, Los Angeles, Atlanta and southern Florida.

As in 16 other cases, the arbitrators ruled that Ross’s claim filed in 2018 missed Finra’s time-eligibility standard, which requires claims to be made within six years of underlying “events and occurrences.”

The former advisors, managers and executives claimed that Merrill misled them and other investors about the quality of loans packaged into collateralized debt obligations and residential mortgage-backed securities that collapsed and forced Merrill’s sale to Bank of America in 2009.

“Claimant is demonstrably a knowledgeable, experienced former Senior Executive” who held on after his retirement to options and shares that bottomed at $7 a share in November 2008, and kept them after they converted to BofA shares, arbitrators Brian M. Kane, John P. Cullen and Richard S. Zaifert wrote in the June 24 decision.

They also wrote that he had plenty of opportunity to file his claim earlier because numerous articles about Merrill’s improper securitizations, loose underwriting standards, and subprime loan risks were written before 2008, an employee lawsuit was settled for $75 million in 2009, and a government settlement of almost $17 billion was reached in 2014.

Michael Taaffe, one of the two lawyers that has been shepherding the cases for the Merrill plaintiffs, said he does not plan to challenge the ruling but noted that about 40 other cases continue in arbitration after denial of Merrill’s motions to dismiss, including six of the last seven considered this year, and that some others have settled. Merrill overall has succeeded in fully or partly dismissing about 18 cases, he said.

An arbitration panel last month denied the firm’s attempt to dismiss a claim by Jill Packard, a New Haven, Conn. broker who retired six years ago after spending her 32-year brokerage career at Merrill, according to her BrokerCheck history.

Taaffe, who is with Shumaker, Loop & Kendrick in Florida, also claimed that one of the arbitrators in the Ross case and another who was not on the decision have ruled on Merrill’s behalf in half of the dismissals.

The Ross dismissal was at least the fifth granted this year. Others have involved former Merrill retail brokerage head Lyle LaMothe, former divisional manager Brian Sepe, former branch manager Thomas Hirsch and 20-year Merrill veteran Charles R. Carson.

Merrill spokesman Bill Halldin, who has declined to comment on the previous stock-loss cases, did not immediately respond to a request for comment on the Ross decision.

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