Merrill Lynch Professional Clearing is Hit with a Mammoth Award of $64 Million

A Financial Industry Regulatory Authority (FINRA) arbitration panel has ordered Merrill Lynch Professional Clearing Corporation to pay Claimants $63,665,202 in compensatory damages, plus interest. The massive award revolved around unexpected margin calls which caused the losses in two hedge funds of Rosen Capital Partners LP and Rosen Capital Institutional LP.

The Claimants had asserted various causes of action in the case including breach of contract, breach of the duty of good faith and fair dealing, fraud, negligence and certain articles of the New York U.C.C., among other things. The initial claim for damages was for $90 million in compensatory damages, which was reduced to $77,717,916 at the close of the evidentiary hearing.

Following the ten (10) day evidentiary hearing the Panel adjourned into executive session to review all of the oral and documentary evidence prior to advising of their decision. The Panel concluded that Merrill Lynch was liable and ordered them to pay the Claimants compensatory damages in the amount of $63,665,202, in addition to interest on the $63,665,202 at the rate of 9% per annum from October 7, 2008 until the award is paid. Finally, the Panel split the forum fees of the arbitration equally between the parties, ordering each side to pay $13,050. (FINRA# 09-03094; Rosen Capital Partners LP and Rosen Capital Institutional LP v. Merrill Lynch Professional Clearing Corporation).

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