Scott Martin

ContactScott Martin has been covering the financial markets since 1996 and the securities business since 2001. He was a long-time columnist for Research, market writer at CNNfn.com, and editor of Buyside; his work currently appears in publications like The Trust Advisor, Institutional Investor, and EmergingMoney.com.
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Business As Usual Cost Merrill Lynch Advisor A Pro Baseball Client edit
Thursday, January 26, 2012 08:13

Tags: fiduciaries | Merrill Lynch

Doug Mirabelli, formerly of the Boston Red Sox, has won more than $1.2 million in damages and fees from Merrill Lynch related to the way the firm handled his account back in 2008.

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On the surface, Merrill handled Mirabelli's account just like anyone else's.

 

Advisor Phil Scott invested the $880,000 he got from the retired catcher in a portfolio of stocks and then somebody -- the reporting's not clear -- leveraged up the account by about 110%.

 

Unfortunately, this was in March 2008. Eight months later, Mirabelli's positions were down 44% and Merrill made a margin call to liquidate.

 

Mirabelli's lawyer argued that Scott breached his "fiduciary duty" by failing to explain how risky the investments were and how the leverage would work. 

 

This part is also vague, because the portfolio is being variously described as a dividend-heavy income strategy and an "all-growth" strategy.

 

But the arbitrator took the catcher's side and awarded him $1.2 million in damages, reportedly making him whole.

 

Merrill argues that "the account was handled properly during a very difficult time when there was extreme market volatility."

 

I might be stupid, but that sounds about right. It was business as usual at Merrill and a lot of other places. Whether that "business as usual" is right or wrong for investors, you probably have a good opinion already.

 

A lot of people lost vast amounts of money in the 2008 crash and not all of them blamed their broker.

 

And Scott is a broker, or this case wouldn't be in front of FINRA in the first place. He's not a fiduciary. 

 

Whether the investments were "suitable" and adequately explained is another story. FINRA evidently thought they weren't. 

 

 

 

 

 

 

 

 

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