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

January 23, 2012 by Leave a Comment

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

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Money Through the Ages: Setting Up a Plan to Get the Family Finances Back on Track

August 29, 2011 by Leave a Comment

JUST before 9 a.m. on a recent March morning, Mark Flake was working the phone at his office here in northwest Arkansas.  The phones have been ringing lately, and that’s a good thing because Mr. Flake is a real estate agent and a property manager — and it wasn’t long ago that things were painfully quiet.

“I will never complain about being busy,” said Mr. Flake, 41, a trim sandy-haired man in khakis and a yellow polo shirt with a Weichert Realtors logo. In fact, Mr. Flake had one of his best income years last year — a relief after the brutal slowdown of 2008 and 2009, when his income plunged by about 30 percent.

The drop in pay, with mounting medical bills and a curve ball in their personal life, led Mr. Flake and his wife, Amy, to exhaust their savings. As they shifted spending to credit cards their debt mounted, and conversations about retirement saving took a back seat to making the mortgage payments on their home in nearby Rogers.

But with his income now beginning to stabilize, Mr. Flake has been taking stock. He and his wife aren’t as bad off as some — they still own their home and, while they’ve lost equity, they don’t think it’s worth less than their $150,000 mortgage.  Mr. Flake has some real estate holdings, including a pair of rental duplexes and part of a limited liability company that owns commercial property.  He expected those holdings to pay off in the long term, but they wouldn’t yield much if sold at current prices.

He has added to his income by managing clients’ properties as well as his own. His emergency cash, though, has dwindled to $1,000, and he has no formal retirement fund.  He knows he should save for retirement, but says the very notion of retirement is alien to him. “I don’t think I’m ever going to retire,” he said, shaking his head.

Still, he can foresee a future in which, perhaps, he won’t have to be constantly on call for clients or tenants, as he is now. But a major impediment to saving for that day is that the Flakes must first pay off debt they accumulated during the property bust — roughly $55,000, excluding their mortgage and a car payment.

A chunk of the total is student loans, but much of the debt was run up on credit cards covering expenses like medical treatment and operations for two of their children. “It adds up,” said Mrs. Flake, 37, in a telephone interview from her home. “The last couple of years have been tough.”

Adding to the strain on their budget was the unexpected addition of a family member. In October 2008, they learned that a relative of hers with an 8-month-old son was going to prison. If the Flakes could not take the baby, he would be placed in foster care. The Flakes did some soul searching and decided to seek custody of the boy, delaying a plan by Mrs. Flake to resume working. “It’s not every day,” Mr. Flake said, “you have the chance to do something that can really change someone’s life.”

Last fall, though, Mr. Flake realized his financial situation was precarious. A credit counseling service helped him negotiate a consolidation loan to pay off his nonsecured debt at an interest rate of about 3 percent. He expects to pay it off in about four years. “You really can’t save effectively until you’ve got that off your back,” he said.

Ann Garcia, a financial planner in Portland, Ore., with Maas Capital Advisors, said in a phone interview that the Flakes’ predicament “isn’t terribly unusual,” given the lingering effects of the housing collapse.

Ms. Garcia’s own family has seen its share of economic ups and downs — her husband works in technology, as she once did, and has endured six layoffs in the last 15 years. That’s why it’s crucial to have a cash cushion, she says, and that should be the Flakes’ first priority.

Ms. Garcia supports Mr. Flake’s commitment to ridding himself of debt. But she advises keeping that goal in perspective as his income stabilizes. (He made about $65,000 last year from his real estate holdings, property management business and home sales commissions combined, and expects to make about the same this year.)

Article source: http://feeds.nytimes.com/click.phdo?i=a7409c4579c74004ec07c83636cf789e

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In California, Strategy as Tough as Traffic

April 13, 2011 by Leave a Comment

“I only stopped here because I’m running on empty,” said Maura Trejo, a real estate agent. “You’d have to be pretty silly to fill up here. What a waste of money.”

It was substantially better but still pricey across the street. Shell was selling regular for $4.23 a gallon. One more mile east, it was $4.31 a gallon.

Even when gasoline is not near its peak, California almost always has the highest average gas prices in the continental United States, owing to a combination of high state and local taxes and stringent state fuel regulations. This forces Californians to be more calculating than drivers in other states about where to buy, how to track down cheaper options and whether to spread the word about a particularly cheap station.

Certainly, anyone who spends time shuttling around Southern California’s inland suburbs, where the round-trip commute to Los Angeles can be 100 miles a day, knows that buying gas from a station off any freeway is an express lane to pauperdom.

“It’s always worse here,” said Yolanda Buller, who commutes into Los Angeles, where she works as a hospital receptionist.

Those who don’t like to hide a good discovery love to boast about an off-the-beaten-path pump with the cheapest prices. There are those who debate that approach; how much can one really save by driving several miles out of the way (“In traffic?,” they’ll ask incredulously) just to save a couple of bucks?

But they have no choice when they forget to fill up in the morning. So they pull out their crumply dollars and put in only what they need to get down the road.

Dozens of California cities top the list of the current highest prices in the nation, as measured by the Web site gasbuddy.com. Santa Barbara always has relatively expensive gas, as do several cities in the Central Valley. In Santa Monica, one station was charging a whopping $5.69 for premium full-serve gas, making the $4.69 for regular self-serve seem like a relative bargain.

It’s enough to turn even the most generous car-pooler into a bit of a cheapskate.

Jacque Jones, a 33-year-old musician, agreed to drive his friend from Diamond Bar to Los Angeles, about 30 miles. Every time he fills up his Ponitac Aztek these days it costs at least $60. So this time he made his friend fork over $5. These days, he said, “I’ve got to take all I can get.”

He gave his friend a look of mock embarrassment before adding: “Man, this thing don’t drive itself for free.”

Article source: http://feeds.nytimes.com/click.phdo?i=749db7ca6b226012a879af0a2b7ed2cd

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