Bank of America Merrill Lynch has lost no time appealing an adverse $10.2 million arbitration award.
Two former Merrill brokers, Tamara Smolchek and Meri Ramazio of Florida, sued Merrill for deferred compensation they lost after leaving for Morgan Stanley in November 2008.
A three-person Financial Industry Regulatory Authority Inc. panel yesterday awarded Ms. Smolchek $4.3 million and Ms. Ramazio $875,000 in compensatory damages.
The panel also whacked the brokerage for $5 million in punitive damages and sanctioned Merrill for discovery abuse.
But shortly after the award came out yesterday, Merrill filed a petition with a federal court in Florida seeking to overturn the decision.
It claims it never got a fair hearing, and alleges bias on the part of the panel chairwoman, Bonnie Pearce.
In its court petition, the firm said Ms. Pearce failed to disclose that her husband was a plaintiff's attorney who has sued Merrill Lynch on behalf of brokers or customers in at least five cases, including a win against the firm for more than $1 million.
Ms. Pearce “demonstrated overt hostility toward Merrill Lynch,” the court filing said. “Her failure to disclose information suggesting possible bias [and her] rulings precluding Merrill Lynch from introducing relevant evidence critical to its defense” support the firm's request to vacate the award, it said.
The arbitration panel, in a sharply worded decision, said a Merrill Lynch committee that determines whether to vest departing brokers in their deferred pay was nothing “but a sham committee that did nothing more than rubber-stamp denials.”
The committee had never approved a request for vesting, despite Merrill's own analysis that it might have to pay “anywhere from hundreds of millions to several billion dollars in potential liability,” the award said.
“This decision is wrong and the amount of the award bears no relation to the damages at issue,” Merrill spokesman Bill Halldin said in a statement.
Finra spokeswoman Michelle Ong declined comment. InvestmentNews was unable to reach Ms. Pearce for comment.