Merrill Lynch Gets Handed an $8.1M FINRA Award

A Boca Raton, Florida Financial Industry Regulatory Authority (FINRA) arbitration panel decided that Merrill Lynch had breached its fiduciary duties to Claimants and ordered them to pay Staton Family Investments $8,100,000 in compensatory damages.

In a claim that was originally filed in December 2008 and amended in June 2009, the Claimants asserted some 15 various causes of action, including fraud, breach of fiduciary duty, breach of contract, negligence and breach of the implied covenant of good faith and fair dealing, among other things. The causes of action were all related to Merrill Lynch's illegal seizure and theft of 1,260,000 shares of common stock in Duke Realty Corporation (DRE) from the Claimants' accounts.

Originally, the Claimants had requested compensatory damages in the amount of $300,000,000, plus treble damages, attorneys' fees and costs. At the close of the hearing the Claimant requested taxes in the amount of $854,000, loss from the sale of shares in the amount of $327,602, loss of dividends over lifetime in the amount of $14,879,721 and losses from bonds in the amount of $4,500,000, plus treble damages.

After the conclusion of the twelve (12) day evidentiary hearing, the FINRA panel took the case under advisement to consider all of the oral and documentary evidence presented prior to making their ruling. Thereafter, the panel concluded that Merrill Lynch Bank, Merrill Lynch Bank & Trust and Merrill Lynch, Pierce , Fenner & Smith, Incorporated was liable for their breach of fiduciary duties to the Claimants and ordered to pay Claimants the sum of $8,100,000 in compensatory damages. The FINRA panel split the $34,050 in forum fees for the arbitration equally between the sides, assessing each with $17,025. (FINRA# 08-04586; Staton Family Investments, Ltd. And Daniel C. Staton v. Merrill Lynch, Pierce, Fenner & Smith Inc., Merrill Lynch Bank USA, Merrill Lynch Bank & Trust Company FSB, Christopher Dale Jacobs, Margot M. Dwyer, James R. Dickson, Gerald Andres Schwinn, Jr., and The Jacobs Team).

Although it is not necessary for the arbitration panel to agree unanimously on its decision, it is interesting in this case who the dissenting arbitrator was. In a two to one decision, the panel entered its award in behalf of the Claimants, with the sole dissenting arbitrator being the Public Arbitrator-Presiding Chairperson.

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