Ex-Merrill Broker Wins $282,000 Rep disputed firm's claim of "job abandonment."
An NASD arbitration panel in December awarded a former Merrill Lynch broker $282,000 in a wrongful termination claim.
Rep Craig Larson was recruited by Merrill from Edward Jones to open an office in Sheboygan, Wis., according to Larson's attorney Jim Eccleston of Eccleston & Associates in Chicago. But with construction costs of almost $2 million on the new office, the branch manager needed to show immediate revenue - more than Larson's fee-based business and financial planning provided, Eccleston says.
So the manager allegedly concocted a plan to dump Larson. According to Eccleston, when Larson was on a business trip, another Merrill employee was told to occupy Larson's office and tell clients Larson was no longer with the firm.
Merrill terminated the broker and claimed "job abandonment" on Larson's U-5.
Arbitrators awarded damages for Larson's claims of wrongful termination and breach of contract, and ordered an amended U-5 to state that Larson had been "wrongfully discharged." Larson's signing bonus was also forgiven, according to Eccleston.
Eccleston adds that Larson never signed Merrill's employment agreement and had insisted on a "just cause" termination provision in his contract.
Merrill spokesperson Joe Cohen says, "We disagree with the finding and believe the actions our firm took in this matter were appropriate." The firm is not appealing the case.
Larson is now a broker with KMS Financial Services in Seattle.
In the West Virginia case now on appeal, Prudential Securities claims Merrill Lynch refused to process ACATS forms - including a request filed by one of the brokers for his own account, as well as a transfer request from another broker's mother and her husband's grandfather.
A Merrill spokesperson says: "Merrill Lynch never refused to properly process account transfers. The court prevented the brokers from accepting business or transfers from any client they wrongfully solicited."
In January, the SEC renewed the NASDR's five-year-old pilot program that mandates expedited arbitration in TRO cases. The pilot was extended through Jan. 4, 2002.
Several comment letters regarding the proposed TRO rule took the NASDR to task for allowing firms to ignore transfer requests from customers of enjoined brokers - in violation of SRO rules.
In its December response, the NASDR concedes that the account-freeze issue "may warrant attention." But it claims the rule proposal is not the place to address the problem since the proposal deals with arbitration procedure, not "substantive" policy.
An industry source, who asks not to be identified but who is involved in TRO cases from both sides, says the NASDR is involved in a "game of semantics." The injunctive relief rule is what "sets up the procedure that has created a substantive detriment to clients," he says.
The NASDR declined comment on whether it is reviewing the account-freeze issue. The SEC did not respond to calls.