Jan 23 (Reuters) - Former Red Sox catcher Doug
Mirabelli has earned another victory, this time off the field.
An arbitration panel ruled on Jan. 13 that Merrill Lynch
must repay Mirabelli more than $1.2 million in damages and fees
for providing inappropriate investment advice to the two-time
World Series champion and his wife, Kristin.
"It's rare for a FINRA (Financial Industry Regulatory
Authority) arbitration panel to award every dollar amount of
out-of-pocket loss," said Barry Lax, Mirabelli's lawyer, in an
interview.
Lax estimates that less than 5 percent of the cases he has
dealt with in his roughly 20 years in the industry have resulted
in this type of full-repayment ruling -- where the claimant
receives the complete original investment, in addition to all
legal fees and associated arbitration costs.
"The panel basically put the Mirabelli's back in a position
that they would have been in had they never met Phil Scott (the
Merrill Lynch adviser)," he said.
The case was argued against one of Merrill's top advisers,
Scott, a Bellevue, Washington-based broker who has been with
Merrill for nearly three decades. Scott was ranked the top
adviser in Washington State last year by Barron's and managed
about $1.1 billion in client assets.
The Mirabelli's invested about $1.8 million, all of their
liquid assets, with Scott in early 2008, according to Lax. Scott
then put those assets into his team's income portfolio, which is
made up of 33 dividend-paying growth stocks.
Because the account was collateralized through loans, if the
value of the account fell below $1 million in value, they would
need to sell out of the securities held in the accounts -- which
is what happened in November 2008, amid an industry-wide
meltdown of financial markets.
The result was a roughly $800,000 loss for the Mirabelli's.
Lawyers for the couple argued that Scott put the Mirabelli's
assets in "inappropriate" investments, offering the
recommendation and purchase of unsuitable securities; in this
case, an all-growth stock portfolio.
Merrill Lynch spokesman Bill Halldin said the firm disagreed
with the panel's decision, given the facts presented in the
case.
"This account was handled properly during a very difficult
time when there was extreme market volatility," he said.
The FINRA arbitration ruling is: In the matter of the
Arbitration between Douglas Mirabelli and Merrill Lynch, No.
10-03400.
For Mirabelli: John Miller of Swanson Midgley and Barry Lax
of lax & Nelille.
For Merrill: Nathan Alexander and J. David Jackson of Dorsey
& Whitney.
(Reporting By Ashley Lau)
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