October 3, 2024

DealBook: Mirabelli, Former Red Sox Catcher, Wins Case Against Merrill Lynch Adviser

A three-member arbitration panel awarded Doug Mirabelli, seen in 2001, more than $1.2 million.Ezra Shaw/Getty ImagesA three-member arbitration panel awarded Doug Mirabelli, seen in 2001, more than $1.2 million.

Nearly five years after he earned his second World Series ring, Doug Mirabelli has another big win.

This month, an arbitration panel ruled in favor of Mr. Mirabelli, the former Boston Red Sox catcher, in his dispute with one of Bank of America Merrill Lynch’s top financial advisers. The panel also awarded Mr. Mirabelli, 41, and his wife, Kristin, more than $1.2 million in damages and fees.

The decision was the second defeat for the adviser, Phil Scott, in the last 12 months. A second set of clients, John, Natalie and Harriet Baker, won $880,000 in damages against Mr. Scott in June.

Arbitrators ruled in favor of Mr. Scott in a third case in August. Another case, filed in April, is pending, according to records from the Financial Industry Regulatory Authority.

The two defeats are a blow to Mr. Scott, a 27-year veteran of Merrill and one of the most acclaimed members of its vaunted “Thundering Herd” of 15,000 brokers. Mr. Scott was ranked the 33rd top broker in the country and the top adviser in Washington State last year by Barron’s, managing about $1.1 billion in client assets.

“He’s had a long and distinguished career as a financial adviser,” said Bill Halldin, a spokesman for Merrill.

The case pressed by Mr. Mirabelli, who was the personal catcher for the pitcher Tim Wakefield and is now a real estate agent in Michigan, is unusual in some ways. Mr. Mirabelli and his wife invested $880,219 in March of 2008 with Mr. Scott, who put the money into the Merrill Lynch Phil Scott Team Income Portfolios, a collection of 33 dividend-paying growth stocks. They took out loans that made the account worth about $1.8 million. The loans were made on the condition that the account not dip below $1 million.

By November 2008, the Mirabellis’ account had fallen below that level, forcing them to sell the portfolio to cover the loans amid markets battered by the financial crisis.

In the arbitration case, lawyers for the Mirabellis argued that Mr. Scott had put his clients’ money into unsuitable investments, specifically an all-growth-stock portfolio. They also argued that he had failed to properly brief the Mirabellis on the loans and their requirements.

The three-member panel ruled in favor of the Mirabellis, awarding them their original investment and, in an unusual move, also awarding them all of their legal fees and arbitration costs.

“For Merrill, two awards is fairly significant,” said Barry Lax, a lawyer for the Mirabellis and the Bakers. “That the Mirabellis got all their money back shows that they had a really strong case.”

Mr. Halldin, of Merrill, said: “We disagree with the panel’s decision given the facts presented in this case. This account was handled properly during a very difficult time when there was extreme market volatility.”

Merrill has moved to vacate the award given to the Bakers, essentially appealing the case. The firm has argued that the arbitration panel did not take into account recommendations by Mr. Scott that the Bakers not sell their holdings near the bottom of the post-crisis markets.

Merrill has not yet decided whether to do the same for the Mirabelli case.

Article source: http://feeds.nytimes.com/click.phdo?i=2b32577c188329f219f619f6a241ad2c

DealBook: British Regulator Fines PWC $2.2 Million

LONDON — British authorities announced on Friday that they had fined the accountancy firm PricewaterhouseCoopers £1.4 million, or $2.2 million, for failing to safeguard client assets at JPMorgan Chase’s securities business in London.

The fine is the largest ever imposed by Britain’s Accountancy and Actuarial Discipline Board, the local regulator.

The penalty relates to the accountancy firm’s failure to notify JPMorgan that it hadn’t separated more than $8 billion of its clients’ money from the bank’s own accounts in filings with Britain’s Financial Service Authority from 2002 to 2008.

British authorities have cracked down on banks separating client’s money from their own assets after similar issues arose after the collapse of Lehman Brothers in 2008. The American bank reported the mistake to the Financial Service Authority in 2009, and received a £33 million fine for the oversight in 2010, the largest fine issued by the financial services regulator.

“The tribunal found that P.W.C. had committed misconduct in respect of each allegation in the disciplinary complaint before it,” Britain’s Accountancy and Actuarial Discipline Board said in a statement. “The tribunal found the misconduct in this case to be very serious.”

The regulator added that the £1.4 million fine had been reduced from £2 million because of P.W.C.’s cooperation.

“We are pleased that this matter has now been concluded. We regret that one aspect of our work on the private client money report to the FSA fell beneath our usual high standards,” the accountancy firm said in a statement.

Article source: http://feeds.nytimes.com/click.phdo?i=7068640dcb7d798986aaf804fe1c54c4