A Financial Sector Regulatory Authority arbitration panel ruled in favor of Merrill Lynch and one of his financial advisers in a lawsuit against the company accusing him of negligence.
The Amended and Restated Julian I. Stoopler Living Trust filed a lawsuit in July 2020 accusing Merrill of negligence, breach of fiduciary duty and breach of contract in connection with “investments in primarily American Airlines Group (“AAL”) ordinary shares,” according to an allotment document released Tuesday by the industry self-regulator.
The trust sought $20 million in compensatory damages, interest, costs, filing and hearing costs and any other relief deemed appropriate by the arbitrators, Finra said.
Merrill has denied the allegations and has asked for the claims to be dismissed as well as for any reference to the case to be struck from the record of Steven Davidson, who was not named in the application, according to the award document.
Davidson, who has worked at Merrill since beginning his career in the financial services industry in 1986, has had a dispute with a client since July 2020 alleging “inappropriate investment recommendations from December 2016 through February 2020,” according to BrokerCheck. The dispute was settled for $595,000 and Davidson wrote in the broker’s comments section about it that he denies the allegations of wrongdoing.
“The firm settled this matter to avoid legal costs and the financial adviser did not contribute financially to the settlement,” he wrote.
In the Finra arbitration case, the arbitrators write that they took note of the settlement and reviewed the amount of the payment, recommending that the case be struck from Davidson’s record.
The arbitrators also ruled that the trust’s claim, allegation or information was “false” as well as “factually impossible or manifestly erroneous,” according to the award.
The trust account, according to arbitrators, had a high margin balance when it was transferred to Merrill from Aegis Capital Corp. Davidson, meanwhile — who received no compensation from the margin account — suggested a hedging strategy to the trust, as well as selling AAL stock, according to the award document. However, the “plaintiff, an experienced financial adviser [sic] declined all recommendations,” the arbitrators wrote.
The panel assessed $750 in hearing costs to the trust and $2,250 to Merrill.
Financial planning first reported the price.
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