Former baseball star Angel Pagan wins $1.7 million arbitration award against Merrill Lynch

A former professional baseball player and his wife hit the ball out of the park in a Finra arbitration case against Merrill Lynch that centered on Puerto Rican bonds.

A three-person Financial Industry Regulatory Authority Inc. arbitration panel ordered Merrill Lynch to pay Angel and Windy Pagan $1.7 million in compensatory damages and $88,758 in costs, according to a Jan. 21 award document. Merrill must also pay 4.5% interest on the damages from June 2017 through the award date.

Mr. Pagan, who was an outfielder for the New York Mets, Chicago Cubs and San Francisco Giants from 2006 to 2016, and his wife claimed they lost about $2 million when the Puerto Rican bond market collapsed in the fall of 2013.

After Mr. Pagan signed a four-year, $40-million contract with the Giants in 2012, he opened an account in Merrill Lynch’s Puerto Rico office, according to his attorney, Lloyd Schwed, president of Schwed Kahle & Kress.

Altogether, Mr. Pagan invested $3.3 million in Puerto Rican bonds and closed-end funds. The broker who recommended the investments, Alex J. Gierbolini, sold most of the bonds to Mr. Pagan when Mr. Gierbolini worked for UBS, Mr. Schwed said. UBS also has been hit with many arbitration claims over Puerto Rican bond sales.

In 2012, Mr. Gierbolini moved to Merrill, where he still works, according to BrokerCheck. He has 24 customer disputes on his profile. Mr. Gierbolini was not named in the Finra arbitration case. He was not immediately available for comment.

Mr. Schwed said Mr. Gierbolini and Merrill failed to take heed of warnings in February 2013 about a coming devaluation of Puerto Rican bonds and left Mr. Pagan and his wife overexposed in their portfolio.

A Finra spokeswoman said the award is the largest contested award against Merrill over Puerto Rican bonds.

“The Pagans are thrilled with the award … because it essentially made them whole and returned all of their losses,” Mr. Schwed said.

Merrill disagreed with the arbitration outcome.

“We are disappointed with the panel’s decision,” Merrill spokesman Bill Halldin said in a statement.

The arbitrators denied the Pagans’ request for $6 million in punitive damages and recovery of attorneys’ fees.

Since Mr. Pagan retired from baseball, he and his wife, a former Miss Puerto Rico, have lived on the island, Mr. Schwed said.