By Suzanne Barlyn
Nov 30 (Reuters) - A Brazilian banking heiress who netted
$3.6 million in a securities arbitration case against Merrill
Lynch stemming from alleged unauthorized trades, is trying to
overturn parts of that ruling,which ordered her to pay Merrill
some money and denied further damages, according to court
The heiress, Camelia Nasser de Kassin, asked for more than
$21 million in damages when she filed a securities arbitration
claim against Bank of America Corp.'s Merrill Lynch unit with
the Financial Industry Regulatory Authority in 2008.
Lawyers for de Kassin filed a complaint on Thursday in a
Manhattan federal court asking a judge to overturn parts of the
ruling, decided on September 11. Arbitrators rendered a split
decision finding de Kassin and Merrill both at fault for losses
in the Sophin account. Both the arbitration and court case were
filed in the name of Sophin Investments SA, a company set up to
handle an inheritance Kassin received from an uncle.
The FINRA ruling and newly filed court case are just two
facets of a larger battle between members of the prominent
Nasser banking family from Brazil and Merrill Lynch over several
steep trading losses.
A Merrill Lynch spokesman declined to immediately comment.
In the FINRA arbitration, de Kassin, through Sophin, accused
Merrill Lynch of letting her brother, Ezequiel Nasser, make $389
million in unauthorized trades thought accounts at two Merrill
Nasser, who de Kassin alleged invested in risky securities
such as "naked puts" - a type of options strategy - in Bear
Stearns and Lehman Brothers ultimately left a deficit totaling
between $10.4 million and $11.4 million in the two accounts.
Merrill denied the claims and filed a counterclaim in the
arbitration case against Sophin for breach of contract, seeking
a total of $5.5 million for the deficits in the two accounts.
Arbitrators, in September, found both parties liable. While
Merrill must pay Sophin $6.1 million, Sophin must pay Merrill
$2.5 million - a net of $3.6 million for Sophin. The panel
admonished Merrill for "lapses in record keeping and supervisory
procedures" but said those missteps did not indicate a
widespread problem at the company.
Lawyers for de Kassin, in court papers filed at the U.S.
District Court for the Southern District of New York, argued
that the court should overturn portions of the ruling requiring
de Kassin to pay damages to Merrill, and other parts of the
ruling that deny her further damages.
Lawyers for de Kassin argue that arbitrators disregarded the
law and violated U.S. public policy by ignoring that no power of
attorney was in place authorizing third-party trades in the
Sophin account. But the panel, at the same time, acknowledged
"that such conduct had occurred and that it was illegal."
Securities brokerage customers typically agree in their
account opening statements to arbitrate legal disputes against
their brokerage in FINRA's arbitration forum. Court actions to
overturn arbitration rulings, which are generally binding, are
However, courts can overturn, or vacate, arbitration rulings
in limited circumstances, such as when arbitrators are biased or
show a "manifest disregard" of the law.
Merrill, in addition to its involvement in the arbitration
case, sued three members of the Nasser family in 2008 for
massive trading losses, leading to a $99 million judgment in
Merril's favor upheld in April by a New York appeals court.
Follow us on Twitter @ReutersLegal | Like us on Facebook