Merrill Wins Five Year Ordeal

A Financial Industry Regulatory Authority (FINRA) arbitration panel in San Francisco, California finally ended a five year ordeal involving a Claimant's claim that Merrill Lynch had failed to pay costs and fees, improper distribution of funds and failure to issue 1099 forms upon distribution. All claims were denied in their entirety. It is how the case got to this point that is interesting by pushing arbitrators' patience to the limit. Frankly, this case was for all practical purposes lost long before the evidentiary hearing.

This case was filed, believe it or not, in July 2006, requesting compensatory damages as stated above in the amount of $104,534 related to two IRA accounts of decedent, Vera Freeberg. Following the filing of the Statement of Claim by the Claimant and the Statement of Answer by the Respondent, an initial telephonic pre-hearing conference was scheduled for January 24, 2007. Due to a conflict by one of the arbitrators, it was rescheduled for February 26, 2007. On February 23, 2007, the attorney for the Claimant requested that the pre-hearing be rescheduled due to the fact that "Kathryn Heily was too ill to participate." FINRA rescheduled the hearing for April 19, 2007. On April 18, 2007, the day before the hearing, Claimant's counsel requested another rescheduling. FINRA obliged and set the hearing for May 10, 2007. On May 10, 2007 the conference call coordinator was unable to reach Claimant's counsel. By now the arbitration panel's blood pressure is rising and they enter and Order reiterating that this is the fourth time an initial pre-hearing has been attempted and everyone was available but the Claimant's counsel, therefore, the forum fee for this attempted hearing was charged to Claimant.

Claimant's counsel sent a letter on August 16, 2007 saying that his phones were down on May 10, 2007 and that he had not received notice of the scheduled hearing. FINRA scheduled another hearing for October 5, 2007. Guess what? On the day before the hearing, October 4, 2007, claimant's counsel asked for one more delay because he "had to transport a family friend to the UC San Francisco Hospital for a serious condition." The hearing was rescheduled for October 31, 2007 and FINRA attempted to send notifications to Claimant's counsel via facsimile and email. On the hearing day, October 31, 2007 Claimant's counsel was again unaccounted for. Another tersely written Order was entered and after Respondent's request for dismissal of the case based upon Claimant's counsel's continued failures, the FINRA panel dismissed the case on November 6, 2007, without prejudice.

On December 10, 2007, Claimant's counsel filed a request to re-open the case and set it for a hearing. The panel issued an Order re-opening the case on March 7, 2008 and ultimately the case was set for an evidentiary hearing beginning October 11, 2011.

After five and a half years and following a one day evidentiary hearing the Claimant requested compensatory damages in the amount of $87,165. Thereafter, the panel went into executive session to review the oral and documentary evidence presented and concluded that all of Claimant's claims should be denied in their entirety. The panel also assessed the $8,325 in forum fees for the arbitration as follows: $5,287.50 to Claimant and $3,037.50 to Respondent. (FINRA# 06-03597; Kathryn A. Heily, Executor of the Estate of Vera L. Freeberg v. Merrill Lynch, Pierce, Fenner & Smith Incorporated).

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