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FINRA ARBITRATION AWARD DESCRIBES MERRILL LYNCH’S “RECKLESS DISREGARD FOR THE TRUTH” IN A FORM U5 FILING
In September of 2018, Merrill Lynch terminated the Claimant in this arbitration for allegedly opening up a Bank of America bank account for a customer without authorization. In 2020, the Claimant brought an arbitration against Merrill Lynch seeking expungement of the alleged defamatory reason for termination and also sought $50,000 in compensatory damages. The FINRA arbitration award is viewable here.
The arbitration was conducted under FINRA’s simplified rules before a single public arbitrator and the Claimant represented herself without an attorney. Merrill Lynch was represented by the law firm Seyfarth Shaw LLP.
In her findings, the single arbitrator seemed particularly concerned that Merrill Lynch failed to even speak with the customer about the allegations in dispute. Merrill Lynch also failed to have the customer sign an affidavit supporting the allegations. The client in question was known to be suffering from memory problems so significant that Merrill Lynch terminated her as a brokerage client despite an account balance in excess of $500,000. The client had previously complained about unauthorized trading in her account by her primary advisor.
Reminiscent of the Wells Fargo account fraud scandal, several former Merrill Lynch employees testified that they were encouraged to open new accounts for customers even if the client had existing accounts. Those same former employees testified that the policy for opening up new accounts was “ambiguous and not uniformlty enforced.” Interestingly, the arbitrator noted that the Claimant “only earned $700” from opening up the account in question and concluded that, “[n]o reasonable person would have done so had he or she been aware of the severe consequences that would issue.”
Herskovits PLLC has a nationwide practice representing financial advisors with Form U5 and Form U4 expungement claims. Herskovits PLLC was recently featured in AdvisorHub for successfully obtaining expungement of an FAs Form U5 and even recouping attorneys’ fees. Feel free to contact us for a consultation at (212) 897-5410.