Fed judge affirms $10.2M award to former Merrill Lynch brokers
MIAMI (Legal Newsline) - The U.S. District Court for the Southern District of Florida on Monday denied Merrill Lynch's motion to dismiss a $10.2 million award to two former brokers for unpaid deferred compensation.
The Financial Industry Regulatory Authority arbitration panel determined in April that brokers Tamara Smolchek and Meri Ramazio would receive $5.2 million in compensatory damages and $5 million in punitive damages. The arbiters said that the two were denied deferred compensation after leaving Merrill Lynch once it was acquired by Bank of America.
A class action settlement of $40 million was already arranged with Merrill with more than a thousand former brokers for deferred compensation. But this was for those who were not major producers. Smolchek and Ramazio were major financial advisers.
When the original ruling was issued, Bank of America spokesman Bill Halldin said it was "radically wrong" and "the amount of the award bears no relation to the damages at issue," according to an article in PlanAdviser.
The same article said that Merrill claimed "that the panel arbitrator, Bonnie Pearce, is the spouse of another lawyer, a plaintiffs' attorney who successfully sued Merrill Lynch at least five times on behalf of brokers or customers. Pearce did not disclose this information, Merrill Lynch said in its filing, or they would have stricken her during the arbitrator selection process."
But Judge Kenneth Marra found no basis to reverse the arbitration panel. It said that Merrill was not able to demonstrate a bias or partiality by the panel or that there was misconduct or abuse of powers.
The judge also noted that Merrill knew about Pearce from the beginning and did not mention it before the hearing began.
The judge said, "The hearing then proceeded for at least five days, with Merrill Lynch objecting only after Mrs. Pearce announced several decisions adverse to it."
Bank of America declined to comment.