After losing costly battles with three former brokers last month, Banc of America Investment Services Inc. is now on the hook for $1.63 million.
Late last month, two brokers won an arbitration claim after alleging that the broker-dealer sullied their reputations and potentially damaged their future relationships with clients.
Both brokers, Rock Mirich and Brent Cowin, are based in Las Vegas. They left Banc of America Investment Services in October 2004 to affiliate with Commonwealth Financial Network of Waltham, Mass.
And on July 3, Banc of America Investment Services lost an arbitration claim worth $429,000 to an ex-broker, Jon Nee, who charged that the firm libeled him on his U-5 termination form.
"I've sued this bank dozens of times for various reasons. I have a non-positive view of
Bank of America and how they treat people," said William K. Diehl, an attorney in Charlotte, N.C., who represented Mr. Nee.
"Hopefully, [Mr. Nee] can go forward and not have this blot on his record," Mr. Diehl said. In August 2006, Mr. Nee began working in Charlotte for Stanford Group Co. of Houston.
Shirley Norton, a spokeswoman for
Bank of America, said that the issues are quite different in the two arbitrations, one in Las Vegas and the other in Charlotte. "[All three] brokers received awards in amounts far less than they demanded and won only on a limited number of their claims," she wrote in an e-mail.
"In fact, in the [Las Vegas] matter, the bank won on all counts except for one, and the bank intends to seek a review of that award through the filing of a Nevada state court action," Ms. Norton wrote.
Banc of America Investment Services, a subsidiary of
Bank of America Corp. of Charlotte, has a recent history of arbitration tussles with ex-brokers.
In September 2006, it lost a $1.6 million arbitration claim to disgruntled former brokers who claimed that the firm had failed to deliver on various promises, including a platform that rivaled the wirehouses and an initial $25 million book of business.
At that time, several other former brokers and advisers were in the middle of arbitration claims and lawsuits against the firm.
In the award to Mr. Mirich and Mr. Cowin, the arbitrators ordered the erasing of language of a "defamatory nature" on the brokers' U-5s.
The three-person
Financial Industry Regulatory Authority Inc. panel ordered Banc of America Investment Services to pay Mr. Mirich $800,000 and Mr. Cowin $400,000.
The panel of New York- and Washington-based Finra also ordered three executives with the firm to pay the brokers awards of $5,000 to $10,000, respectively.
Among other claims, the brokers alleged that Banc of America Investment Services and certain executives intentionally interfered with prospective business relationships, libeled and slandered them, and wrongfully fired them.
Mr. Mirich was Banc of America Investment Services' top producer in Nevada and was consistently among its top 10 nationwide, said Marie Mirch, the brokers' attorney, who is based in San Diego. He was "inexplicably terminated" by the firm in 2004 after building his book of business to over $300 million, she said.
In the award to Mr. Nee, Banc of America had to pay a commission of $73,000 and compensatory damages of $506,000. The panel ordered him to pay the firm $150,000, which represents the principal amount of a promissory note he received from Banc of America in February 2006.
Mr. Diehl, Mr. Nee's attorney, said that the dispute between Banc of America Investment Services and Mr. Nee began over the informal giving of gifts between the broker and his manager. The firm eventually said that Mr. Nee violated gift-giving policies, though he said he was unaware that he had broken any rules.
He wanted the firm to change his U-5, which stated that he was fired for an ethics code violation.
That entry blocked Mr. Nee from getting a job with other firms with which he was interviewing, Mr. Diehl said.
The arbitrators said the language concerning Mr. Nee's termination should be changed to a "dispute regarding internal gift giving," according to the award.
E-mail Bruce Kelly at [email protected].
