Former Red Sox Catcher Hands Merrill Lynch and Its Acclaimed Phil Scott Team Its Second Big Loss in a Year

A Financial Industry Regulatory Authority (FINRA) arbitration panel in Detroit, Michigan has ruled in favor of Doug Mirabelli, a former Boston Red Sox catcher, and his wife Kristin by awarding them more than $1.2 million in compensatory damages, interest, costs and attorneys' fees from Bank of America's Merrill Lynch, Pierce, Fenner & Smith Incorporated brokerage firm.

The claim was filed in July 2010, asserting various causes of action including violations of Michigan and Washington Securities Acts; misrepresentation and omission; breach of contract and breach of fiduciary duty, among other things. Each and all of the causes of action were related to the actions of Merrill's registered representative, Phil Scott, for making unsuitable recommendations regarding various securities including Alliance Resource Partners LP, Apollo Investment Corporation and Copano Energy LLC, in the Phil Scott Team Income Portfolio. Records revealed that the Phil Scott Team Income Portfolio consisted of 100% equities. Mirabelli and his wife had requested compensatory damages in the amount of $1,000,000.

The evidentiary hearing lasted for eleven days. After both sides had rested and made their closing arguments, the three member arbitration panel went into executive session to consider all of the oral and documentary evidence prior to issuing its decision. On January 13, 2012, the panel entered its award stating that Merrill Lynch, Pierce, Fenner & Smith Incorporated was liable to Douglas and Kristin Mirabelli and ordered them to pay $800,219 in compensatory damages. The FINRA panel further ordered Merrill Lynch to pay the Mirabellis interest on the $800,219 at the rate of 6% per annum from July 26, 2010 until the date the award is paid in full. Additionally, the panel ordered Merrill Lynch to pay $47,339.91 in costs, plus $391,474 in attorneys' fees pursuant to Michigan law. In their final act, the panel decided to assess the entire $29,250 in forum fees for the arbitration against Merrill Lynch. (FINRA# 10-03400; Douglas A. Mirabelli and Kristin L. Mirabelli v. Merrill Lynch, Pierce, Fenner & Smith Incorporated).

This was the second big blow in a year to the Phil Scott Team, headed by Phil Scott who is recognized as being one of the most acclaimed members of Merrill's "Thundering Herd" of some 15,000 brokers. Walter Schlaepfer , aka Phil Scott according to FINRA records, was also ranked as the 33 rd top broker in the country and the top broker in Washington State by Barron's Magazine in 2010. In addition to being a Top Producer for the firm, it is said that Phil Scott manages more than $1 billion in assets.

The other case against Walter Schlaepfer, aka Phil Scott, and Merrill Lynch was filed in December 2009, asserting violation of the Securities and Exchange Act of 1934; unsuitability; common law fraud; breach of fiduciary duty; breach of contract; failure to supervise; respondeat superior; negligence; gross negligence and negligent supervision, among other things. All of the causes of action related to the Merrill Lynch Phil Scott Team Income Portfolio. The Claimants requested compensatory damages in the amount of $1,700,000, plus interest, attorneys' fees and other things. According to the award and other articles pertaining to the award, one of the Claimants was an elderly 90 year old woman, who was in ill health. She was also placed in the Phil Scott Team Income Portfolio, which was concentrated in equities.

After thirteen days of evidentiary hearings in New York, the parties rested and made their closing arguments to the panel. Thereafter, the panel went into executive session to consider all of the oral and documentary evidence prior to rendering its decision. The panel concluded in its award dated June 23, 2011 that Merrill Lynch, Pierce, Fenner & Smith Incorporated was liable to and ordered them to pay the Claimants $880,000 in compensatory damages. The panel also decided to assess the entire $34,800 in forum fees for the arbitration against the Respondent, Merrill Lynch. (FINRA# 09-06762; John J. Baker, Natalie N. Baker and Harriet B. Baker v. Merrill Lynch, Pierce, Fenner & Smith Incorporated).

Merrill Lynch filed an appeal to have the FINRA arbitration award set aside in the John Baker case, which is still pending. It is unknown if Merrill Lynch intends to file an appeal in the Mirabelli case.

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