What Did Your Brokerage Firm or Investment Adviser Do Wrong With GWG
Published On: October 11, 2016

According to a recent InvestmentNews article entitled “Merrill Lynch owes stiffed brokers $800,000 in damages after termination dispute, finra says,” a Financial Industry Regulatory Authority (FINRA) arbitration panel ordered Bank of America Merrill Lynch to pay $800,000 in compensatory damages to two brokers who claimed the firm stiffed them in compensation after they were fired without cause. Merrill Lynch alleged that Roman Reed and Victor Barrionuevo owed the firm money under a promissory note agreement they signed when they were hired in April 2009, according to a FINRA arbitration document. The firm claimed $1.6 million in damages after their employment was terminated “for cause” in 2015, citing the promissory note balance and unjust enrichment, after Mr. Reed and Mr. Barrionuevo were accused of improperly handling a customer complaint, violating industry rules and standards.

The brokers then filed a counterclaim of fraud, defamation and tortious interference with an existing contract, saying there was no cause for termination and that Merrill had financial incentive to fire them. The FINRA arbitration panel found in favor of the brokers, which is uncommon because financial advisers typically lose to their former brokerage firms. According to the arbitration award document, “the panel does not find credible Merrill Lynch’s explanation for the brokers’ termination. The evidence bears out that the brokers were fired because Merrill Lynch wanted to retain the customer’s lucrative business without having to honor the transitional compensation contract with the brokers. The letters from the customer state explicitly that the brokers had done nothing wrong with the handling of his complaints and that no negative action against the brokers was called for. The customer admitted that he was surprised that Merrill Lynch offered him a settlement, much less a settlement that exceeded the amount he demanded.” The bank is also responsible for the brokers’ attorneys’ fees, which totaled $215,000, bringing the firm’s tab to slightly more than $1 million.


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