Merrill Lynch has settled with a broker who claimed the firm forged his signature on a noncompete agreement.
Merrill sued Phoenix broker Stephen Callahan in an Arizona federal court Nov. 8, 1999, after he went to PaineWebber. As evidence supporting its request for a temporary restraining order (TRO), Merrill filed a copy of a noncompete agreement that carried Callahan's undated signature.
But Callahan claimed he never signed the agreement. In court papers, he accused the firm of copying his signature from a separate training contract. A report prepared by Callahan's handwriting expert says the two signatures "exactly overlaid one another," and that the signature on the noncompete had been "cut and pasted" from the training agreement.
A week after suing Callahan, Merrill dropped its request for a TRO. Merrill's outside attorney told the judge that Merrill doubted the authenticity of the noncompete and that an attorney from the firm's New York compliance department had been brought in to investigate the incident.
In December, Merrill settled with Callahan, paying him an undisclosed amount.
Callahan claims he and other brokers in the Phoenix area hired in 1992 and 1993 did not have to sign noncompetes. He says that he refused to sign such an agreement when asked to in March 1999, and that Merrill was unable to produce an original noncompete form with his signature.
A Merrill spokesperson says only that the matter was settled and the firm "has taken appropriate [disciplinary] action."