merrill lynch

Pressure on Apple Leaves Markets Mixed

September 11, 2013 by NewsMaker

Stocks had a mixed close on Wednesday as a drop in shares of Apple weighed heavily on the Nasdaq and after President Obama pledged to explore Russia’s diplomatic plan to remove chemical weapons from Syria.

By the end of trading the Standard Poor’s 500-share index was up 0.3 percent, the Dow Jones industrial average gained 0.9 percent and the Nasdaq composite was down 0.1 percent.

Apple shares slumped 5.4 percent, and were the biggest drag on both the S. P. 500 and Nasdaq indexes. Credit Suisse, UBS and Bank of America Merrill Lynch each lowered their rating on the stock to neutral after the company unveiled new iPhone models Tuesday.

Part of the problem for Apple, said Ken Polcari, director of the N.Y.S.E. floor division at O’Neil Securities in New York, is that analysts and consumers “keep comparing everyone who speaks, every product that comes out to what Steve Jobs would have done.”

“Apple is a great company, they’ve done the right thing in coming up with two price products to meet the marketplace — it’s Apple and everybody likes to take a shot at it,” he said.

In a speech Tuesday evening Mr. Obama said a Russian offer to pressure President Bashar al-Assad of Syria to place his government’s chemical weapons under international control increased the odds of putting off a limited military strike that he is considering, but voiced skepticism about the plan.

Mr. Obama also asked leaders in Congress to put off a vote on his request to authorize the use of military force in order to allow diplomacy to play out.

“I don’t see any compelling reason the market should sell-off here and certainly with the potential international diplomacy bomb being defused, we will move sideways here for the next few days until we get the Fed next week,” said Keith Bliss, senior vice president at Cuttone Company in New York.

The Federal Reserve is scheduled to begin a two-day policy meeting on Sept. 17, at the conclusion of which many market participants expect the central bank to announce it will begin to scale back its bond-buying program, which has helped shore up the economy and boost the stock market this year.

United States benchmark crude rose, gaining 31 cents a barrel to $107.70.

The S. P. 500 has gained 3.1 percent over the past six sessions, its longest winning streak in two months, as concerns ebbed about a Western military strike against Syria and as data showed improving growth in China, the world’s second-biggest economy.

Texas Instruments, the No. 3 chip maker in the United States, dipped 0.7 percent after it lowered its third-quarter forecast.

Harvest Natural Resources, an oil and gas producer, surged 26.8 percent after the company said it was in exclusive talks to sell itself to Argentina’s Pluspetrol in a deal valued at about $373 million including debt.

Article source: http://www.nytimes.com/2013/09/12/business/daily-stock-market-activity.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: bashar al assad, merrill lynch, share index

DealBook: In Stock Offering, Coty Seeks Up to $1 Billion

May 28, 2013 by NewsMaker Leave a Comment

Dimitrios Kambouris/Getty Images for CotyCoty makes several celebrity-branded perfumes, including one by Katy Perry.

Coty sees plenty of investor appetite for celebrity-branded cosmetics, disclosing on Tuesday that it was hoping to raise as much as $1 billion from its forthcoming initial public offering.

It now plans to sell 57.1 million shares at $16.50 to $18.50 apiece, according to an amended prospectus filed on Tuesday. At the midpoint of that range, the company would be valued at about $6.7 billion.

Existing-Home Sales Hit a 3-Year High

May 22, 2013 by NewsMaker Leave a Comment

The National Association of Realtors said on Wednesday that existing-home sales had advanced 0.6 percent to an annual rate of 4.97 million units, the highest level since November 2009. The data underscored the housing market’s improving fortunes as it starts to regain its footing. Resales were 9.7 percent higher than in the same period last year.

“It’s quite supportive of the overall economy,” said Michelle Meyer, a senior economist at Bank of America Merrill Lynch in New York. “It’s a cushion against some of the other concerns in the economy.”

Tight supplies in some parts of the country have constrained the pace of home sales, but sellers are starting to wade back into the market, attracted by rising prices.

In April, the median home sales price increased 11 percent from a year ago to $192,800, the highest level since August 2008. It was the fifth consecutive month of double-digit gains.

With prices rising, more sellers put their properties on the market. The inventory of homes on the market rose 11.9 percent from March to 2.16 million.

Adding to signs that the housing recovery was becoming firmly established, distressed properties, which can weigh on prices because they typically sell at deep discounts, accounted for only 18 percent of sales last month.

That was the lowest since the real estate association started monitoring them in October 2008. Those properties — foreclosures and short sales — made up 21 percent of sales in March.

In another bright sign, properties were selling more quickly. The median time on the market for homes was 46 days in April, down from 62 days the previous month.

About 44 percent of all homes sold in April had been on the market for less than a month, while only 8 percent had been on the market for a year or longer.

Sales were up in three of the four regions, falling 3.4 percent in the Midwest.

Article source: http://www.nytimes.com/2013/05/23/business/economy/existing-home-sales-at-highest-level-in-3-years.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: bank of america, merrill lynch, pace

Ruling Clears Way for $7 Billion A.I.G. Suit Against Bank of America

May 8, 2013 by NewsMaker Leave a Comment

The ruling, issued late Monday, is a setback for Bank of America, which has been trying to rid itself of numerous legal claims from investors who bought mortgage securities issued by the bank’s Countrywide Financial and Merrill Lynch units. In the California case, in which A.I.G., the giant insurance company, sued Bank of America over fraudulent mortgage securities, the bank had argued that A.I.G. had no standing to sue because it had transferred that right when it sold the instruments to the Federal Reserve Bank of New York in the fall of 2008.

Mariana R. Pfaelzer, a federal judge in the central district of California, disagreed. She sided with A.I.G. in a ruling that also raised questions about the role of the Federal Reserve Bank of New York in the wake of its efforts to contain the huge damage from the financial crisis that erupted when Lehman Brothers was forced into bankruptcy in September 2008.

A.I.G. said in a statement, “As a result of the court’s decision, A.I.G. is able to pursue its full damages claim against Bank of America.”

Asked to comment on the judge’s decision, Lawrence Grayson, a spokesman for Bank of America, said the court ruling allowed it to “pursue additional discovery before the matter is fully decided.” He added that the bank believed it has strong defenses to A.I.G.’s accusations.

New York Fed officials, testifying earlier on behalf of Bank of America, maintained that they had intended to receive the rights to bring fraud claims related to the mortgage securities purchased by Maiden Lane II, the investment vehicle set up to complete the A.I.G. bailout.

But in depositions in March, Fed officials could produce no evidence that the fraud claims had been specifically transferred under the deal, as required under New York law. Judge Pfaelzer wrote: “To the extent that the Federal Reserve Bank of New York intended for Maiden Lane II to acquire these claims, its intentions were not expressed to A.I.G.”

The Fed’s view on who held the legal claims for fraudulent mortgages in Maiden Lane II has shifted over time. In October 2011, Thomas C. Baxter Jr., the general counsel at the New York Fed, said in a letter to A.I.G. that he and his colleagues “agree that A.I.G. has the right to seek damages” under securities laws for the instruments it sold to Maiden Lane II.

But after A.I.G. sued Bank of America, that opinion changed. Last December, James M. Mahoney, a vice president at the New York Fed who said he had principal responsibility for the Maiden Lane II transaction, testified that the New York Fed intended to receive litigation claims associated with the troubled mortgage securities. Bank of America filed Mr. Mahoney’s testimony in support of its position that A.I.G. had no standing to sue.

Yet in a deposition three months later, Mr. Mahoney was asked if he could recall discussing the assignment of fraud claims from A.I.G. to the Fed. He answered: “No, I do not.”

The New York Fed never filed any claims against banks relating to the A.I.G. rescue that might have benefited taxpayers. New York Fed officials agreed to testify on behalf of Bank of America as part of a confidential settlement with the bank that came to light in February. Under the terms of the deal, the New York Fed released Bank of America from all fraud claims on mortgage securities the Fed had bought.

A spokesman for the New York Fed declined to comment on the ruling. Previously, the New York Fed said it had agreed to testify in the case because doing so helped it obtain the best possible settlement for Maiden Lane II.

While Judge Pfaelzer’s ruling added to the legal claims faced by Bank of America, it emerged after the bank successfully disposed of several others. On Monday, in the latest such effort, the bank agreed to pay $1.7 billion to settle a long-running dispute with MBIA, a mortgage bond insurer.

The bank could erase another claim on May 30 if a judge in New York State court allows an $8.5 billion settlement struck between Countrywide and a group of big investors in 2011 to be completed. Investors objecting to the deal say the amount of the settlement is insufficient.

The California judge’s finding that A.I.G. has standing to sue Bank of America may also be bad news for other banks that sold troubled mortgage securities to the insurer. A.I.G. has not yet sued other institutions related to the securities that went into Maiden Lane II; at least $11 billion in losses involve other banks.

“We are eager to start discovery,” said Michael Carlinsky, a partner at Quinn Emanuel Urquhart Sullivan who led the arguments for A.I.G., “and get the case before a jury.”

Article source: http://www.nytimes.com/2013/05/08/business/ruling-clears-way-for-aig-suit-against-bank-of-america.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: bank of america, federal reserve bank, merrill lynch

DealBook: Bank of America Profit Misses Expectations

April 17, 2013 by NewsMaker Leave a Comment

Richard Drew/Associated PressThe bank’s shares rose nearly 35 percent in the last year but fell almost 5 percent on Wednesday.

8:06 p.m. | Updated

Bank of America reported first-quarter earnings on Wednesday that fell well short of Wall Street’s expectations but that were substantially higher than in the period a year earlier.

The bank made 20 cents a share in the first quarter, compared with 3 cents in the year-earlier period. Analysts expected a profit of 23 cents a share. Bank of America, the nation’s second-largest lender by assets, had revenue of $23.5 billion in the first quarter.

News Analysis: Momentum Seems to Build for Gargantuan Buyout of Dell

January 16, 2013 by NewsMaker Leave a Comment

Kimihiro Hoshino/Agence France-Presse — Getty ImagesMichael Dell, the chairman and chief executive of Dell.

Dell is advancing toward a goal many thought was all but unattainable since the financial crisis: a leveraged buyout worth more than $20 billion.

The company is in talks with investment firms and its founder, Michael S. Dell, over a deal that would take the technology company off the public markets, people briefed on the matter said on Tuesday.

One potential transaction that appears to be gaining steam is one that would be led by Silver Lake, a private equity firm that focuses on technology deals, one of these people said. The investment shop has already tasked a number of banks — Bank of America Merrill Lynch, Barclays, Credit Suisse and Royal Bank of Canada — with lining up the enormous amount of financing that would be needed, perhaps as much as $16 billion.

Silver Lake is also sounding out potential partners that could help contribute equity financing for the deal, a group that may include wealthy Asian investors, this person said.

Dell is contemplating using some of its enormous store of cash, totaling about $11.3 billion as of Nov. 2, to help defray the deal’s cost. It may do so even though more than 80 percent of its cash is held overseas, and bringing it home could generate a big tax penalty.

Mr. Dell is expected to contribute his roughly 16 percent stake in the company to the deal, helping to lower the ultimate price tag. His shares as of Tuesday’s market close were worth about $3.6 billion. It is unclear whether he would invest additional money as part of a buyout.

Nonetheless, the deal talks appear to have momentum, although one of the people briefed on the matter cautioned that they could still fall apart.

Representatives for Dell, Silver Lake and the banks declined to comment.

Should a deal come together, it would be the most radical step yet to revive a company once so profitable that it gave rise to a class of “Dellionaires” during the Internet boom.

Mr. Dell, who founded the computer maker in his dorm room in 1984, has long cast about for a solution to a world where revenue from personal computer sales has consistently fallen in recent years.

Behind any move to take Dell private is the hope that, freed from the tough scrutiny of public shareholders, the company can continue moving into the more lucrative and stable market of providing hardware and software services for corporations.

The company’s stock had fallen nearly 48 percent in the five years through last Friday, the day before Bloomberg News reported Dell’s talks with private equity firms. Since then, the stock price has climbed 21 percent.

A leveraged buyout of Dell would be one of the biggest private equity transactions since the Blackstone Group acquired Hilton Hotels for $25 billion more than five years ago. To date, no leveraged buyout announced since the financial crisis has surpassed the $7.2 billion that Kohlberg Kravis Roberts and others paid for the Samson Investment Company, an oil and gas driller, in fall 2011.

In part, that has been a matter of logistics. Leveraged buyouts require private equity firms to put money down, much as borrowers do for a mortgage. On average, that amount has been around 30 percent of the overall deal price, meaning that the equity required for a Dell takeover could be significant.

That is why Silver Lake is seeking to bring in at least one partner to help buoy a bid, one of the people briefed on the matter said.

But private equity firms have also taken pains to avoid club deals, in which two or more of them partner together to buy a company. Investors in these firms have complained that the practice essentially multiplies their exposure to a particular transaction.

Private equity firms aren’t fond of them because they essentially erase the distinctions between competitors, potentially making it harder to raise money for new funds.

Any deal would also require a seemingly daunting amount of debt financing, raised from bank loans and junk-bond sales. Several deal makers have expressed confidence in their ability to raise that money, given a hunger among investors for bonds that yield even a few percentage points more than Treasury bonds.

The co-head of JPMorgan Chase‘s global debt capital markets, Jim Casey, told CNBC in October that his firm could raise $15 billion to $25 billion in noninvestment-grade debt for a single transaction.

Some of the other obstacles to a Dell takeover lie specifically with the company. It already bears $4.9 billion in long-term debt — and that is before it assumes the enormous amount that would come from a private equity deal.

While Dell still reports a healthy amount of cash from operations, totaling $3.7 billion for the year ended Nov. 2, much of that could be consumed with paying down debt. A. M. Sacconaghi, an analyst with Sanford C. Bernstein, estimated on Tuesday that the company could pay about $820 million in interest payments each year.

Analysts have questioned whether a private Dell would have the capital to pay for acquisitions, which has been an important vehicle for expanding into new markets. Last year alone, the company struck 10 deals, including the $2.4 billion purchase of Quest Software.

“With a large debt load, we believe Dell would have a more difficult time acquiring smaller enterprise companies — making it harder to diversify away from PCs,” analysts with Barclays wrote in a research note on Tuesday.

“We would be quite surprised if a transaction would take place.”

Ben Protess contributed reporting.

Article source: http://dealbook.nytimes.com/2013/01/15/the-challenges-of-taking-dell-private/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: merrill lynch, private equity firm, silver lake

DealBook: Banned on Wall St.: Facebook, Twitter and Gmail

November 22, 2012 by NewsMaker Leave a Comment

Minh Uong/The New York Times

For young Wall Street employees who live their lives through social media, working at a big bank can feel as if the plug has been pulled. Most financial firms ban Facebook, Twitter and Gmail, while blocking most music and video streaming sites.

Working on Wall Street is “a full life commitment, and without access to social media or personal e-mail it can often feel like nothing exists outside of work,” said one JPMorgan Chase analyst who spoke on condition that he not be named because he is not allowed to talk to the media.

So he and other first- and second-year analysts, who commonly work more than 80 hours a week, are fighting back. They are relying on an informal network of strategies to subvert company firewalls and stay connected.

To watch soccer highlights, for example, one analyst said he translated the names of the teams through Google and looked for them on Rutube, YouTube’s Russian equivalent.

“It’s draconian,” the analyst said of his company’s Web site blocks. “It’s a job where you spend a lot of time waiting to get assignments back from superiors, and you have to find ways to kill the time.”

“YouTube is the biggest obstacle,” agreed an analyst at Bank of America Merrill Lynch who also spoke anonymously. He says that, instead, he searches Vimeo for videos, but it is not nearly as satisfying.

Steven Neil Kaplan, a professor of business and entrepreneurship at the University of Chicago Booth School of Business, said killing time had always been part of the job of a young analyst. While working as an analyst at Kidder Peabody in the early 1980s, he, too, would spend hours talking to his friends on the phone.

“You work very long hours,” Mr. Kaplan said, “and often you’re waiting for someone to turn something around.”

Time spent slacking is acceptable as long as an analyst completes the material when it is assigned. “At the end of the day, if they don’t get their work done, they’re toast,” he said.

Investment banks say regulation is the primary motivator for blocking social media. According to the Financial Industry Regulatory Authority, firms must keep a record of any business communication for three years. The rule applies to correspondence on any device or Web site. While firms are able to monitor e-mails and instant messages internally, it is impossible to track what one employee among hundreds of thousands is communicating on Twitter or through a Facebook chat.

“You have to be able to monitor what people are saying in real time,” said a Goldman Sachs spokesman, Richard Siewert Jr.

Still, bans on YouTube and other streaming content sites suggest the firewalls are also intended to stifle distractions in the workplace. While banks are wary of media sharing sites because of their comments sections, they say it is also a bandwidth issue; 200,000 employees streaming YouTube videos hinders their software systems.

“It’s about the culture,” said the JPMorgan analyst. “We’re not a start-up. It’s a buttoned-up workplace.”

To access blocked content and stay connected, he said he connected to JPMorgan’s guest Wi-Fi using his iPhone or iPad. “It’s nice to be able to have touch points to connect with your life, whether that’s checking your Gmail or Facebook to see whose birthday it is.”

Personal mobile devices are a prime workaround, and Mr. Siewert said even many senior executives used them throughout the day. “Even Bloomberg TV is hard to watch on our computers,” he said. “In the office, you’ll often find people gathered around an iPad watching something on CNBC or Bloomberg they didn’t see in real time.”

Yet analysts say streaming video on phones and tablets is clunky and does not fill the void generated by the Internet blocks.

The ability to access media, both for social and personal entertainment purposes, varies by bank and group. At Credit Suisse and Deutsche Bank, social networks are blocked but not media sharing sites. The occasional crowding around a desk for a funny YouTube video can offer solace during the grind of a long day. Still, there are formalities by which to abide.

“I’ll plug in music usually around five or six in the afternoon, when my bosses start to go home and the environment becomes more relaxed,” said one Credit Suisse analyst. Unable to access Spotify or Pandora, analysts said they streamed music through Web start-ups like SoundCloud and Grooveshark.

According to the research firm Gartner, the number of global organizations blocking social media is declining 10 percent annually. By 2014, fewer than 30 percent of all large organizations are expected to be blocking employee access to social media. As other traditionally straight-laced industries like consulting and law increasingly incorporate social media in the workplace, the financial services lag behind.

“They have such tight regulations, and the fines and the consequences are so extreme, that it’s easier to understand why they are taking this approach,” said Brian Platz, chief operating officer for the human resources technology firm SilkRoad. “The bigger problem they have is, whatever approach they’re taking isn’t preventing it anyway.”

Bank of America Merrill Lynch, Barclays and JPMorgan declined to comment for this article.

Goldman Sachs, however, is working with the software company Hearsay Social to make social media platforms more accessible. Last month, Goldman started making its Twitter feed available to employees through the company’s intranet.

“You don’t want to be so restrictive that people are conducting activity on their nonwork computers because that’s not allowed,” Mr. Siewert said. “ So we have to make the system inside our walls as modern as possible while staying within the rules. The impediment at institutions like ours is often technology or lawyers, and in both cases, I found that wasn’t really true here. It was just culture.”

For the young analyst at Bank of America, he has replaced Web procrastination with a quick walk outside.

“My bosses say it’s healthier,” he said. “At the same time, I just want to laugh. Watching a video is one of those things you can share with the guy in the cube next to you and relax during some downtime.”

Article source: http://dealbook.nytimes.com/2012/11/22/banned-on-wall-street-facebook-twitter-and-gmail/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: kidder peabody, merrill lynch, school of business

Bucks Blog: Fewer Wealthy Americans Say They’re Conservative Investors

September 27, 2012 by NewsMaker Leave a Comment

Getty ImagesTraders at the New York Stock Exchange in August.

Fewer affluent Americans describe themselves as “conservative” investors, suggesting that their tolerance for risk may be rebounding after some tumultuous years.

Thirty percent describe themselves as leaning toward lower-risk investment and savings options (like “mutual funds, bonds, savings and money market accounts”), down from 36 percent a year ago and 50 percent two years ago, according to findings of the Merrill Lynch Affluent Insights survey.

The telephone survey, of 1,000 adults with assets of more than $250,000 to invest, was conducted in August by Braun Research on behalf of Merrill Lynch Wealth Management. The margin of sampling error is plus or minus 3 percentage points.

The shift in attitude toward risk is most clear among affluent investors younger than 50. For instance, about a quarter of investors age 18 to 34 describe themselves as conservative, compared with 52 percent two years ago. These are investors who had become quite wary of the stock market, because of its volatility in the economic downturn. And a quarter of those age 35 to 50 also describe themselves as conservative, compared with 45 percent two years ago.

What is your risk appetite these days? Are you willing to consider individual stocks or alternative investments, or are you sticking with index funds and savings accounts?

Article source: http://bucks.blogs.nytimes.com/2012/09/27/fewer-wealthy-americans-say-theyre-conservative-investors/?partner=rss&emc=rss

Filed Under: Your Money Tagged With: merrill lynch, risk appetite, savings accounts

DealBook: ING Group to Sell Stake in Capital One

September 5, 2012 by NewsMaker Leave a Comment

Jock Fistick/Bloomberg NewsING office’s in Brussels.

9:16 a.m. | Updated

LONDON — The Dutch financial services giant ING Group plans to sell its 9 percent stake in Capital One in a deal that could be worth around $3 billion.

ING acquired the stake in the American firm when Capital One bought ING Direct USA for $9 billion in February.

The Dutch firm said that it would make a net profit of 300 million euros ($378 million) after selling the 54 million shares in Capital One for around $3 billion.

ING added that the gain would help to increase its core Tier 1 ratio, a measure of a firm’s ability to weather financial shocks, to 11.9 percent, and that it planned to complete the transaction by Monday.

The deal for ING Direct USA transformed Capital One into the country’s fifth-largest bank by deposits. The combined business has around $200 billion in deposits, making it larger than regional powerhouses like PNC and TD Bank.

Victor Blue for The New York TimesA branch of Capital One in Brooklyn.

Under the terms of the deal, Capital One issued $2.8 billion worth of new shares to ING, making the Dutch firm its largest shareholder.

The move to sell the shares comes as ING has been forced to sell assets as part of the conditions of a 10 billion euro ($12.5 billion) bailout it received from its local government in 2008.

Along with the sale of ING Direct USA to Capital One, the Dutch firm sold its online bank in Canada to a local rival, Bank of Nova Scotia, last month for $3.1 billion. ING is also planning to sell its Asian insurance businesses.

Shares in ING rose 1.8 percent in early afternoon trading in Amsterdam on Wednesday.

Bank of America Merrill Lynch, Morgan Stanley and Citigroup are the joint bookrunners for the deal.

Article source: http://dealbook.nytimes.com/2012/09/05/ing-to-sell-stake-in-capital-one/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: bank of america, merrill lynch, morgan stanley

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

January 23, 2012 by NewsMaker Leave a Comment

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

Filed Under: Business News Tagged With: client assets, merrill lynch, real estate agent