Ex-Merrill Lynch broker wins $3.75 million arbitration award for defamation

Finra panel said Jeffrey T. Rathmanner was defamed when he left the firm and ordered his U5 expunged

Nov 5, 2019 @ 5:11 pm

By Mark Schoeff Jr.

A former Merrill Lynch broker won a $3.75 million Finra arbitration award against the firm over the way it described his departure.

Jeffrey T. Rathmanner worked in Merrill's St. Paul, Minn., office from 1995 until April 2017, when he was fired by the firm for alleged misconduct, according to his BrokerCheck report. His exit occurred around the same time that a broker with whom he worked, Jeffrey Kluge, a 25-year Merrill veteran, pleaded guilty to an $8.7 million bank fraud.

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But a three-person Financial Industry Regulatory Authority Inc. arbitration panel found Merrill liable for its handling of Mr. Rathmanner's separation from the firm. It ordered that the reason for Mr. Rathmanner's termination be changed to "voluntary" on his Form U5 and that the reason for the termination be left blank.

"The panel recommends expungement based on the defamatory nature of the information," the Nov. 4 award states.

Mr. Rathmanner claimed that Merrill wrongfully fired him. He is now senior vice president for investments at Oak Ridge Financial in Golden Valley, Minn., where he has been employed since he left Merrill in 2017. Neither Mr. Rathmanner nor his attorneys were immediately available for comment.

A spokesman for Merrill Lynch declined to comment.

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