Corporate & Securities Law

Merrill Lynch Socked With $39.8 Million Arbitration Award

By James Eccleston

Merrill Lynch has been socked with a $39.8 million arbitration ruling.  In one of the single largest securities arbitration awards ever, Merrill Lynch & Co. has been ordered to pay $39.8 million to a group affiliated with the Freemasons.

The arbitration award, handed down by a three-member panel of the New York and Washington-based FINRA, ruled March 16th that Merrill Lynch of New York is liable for $30.6 million in compensatory damages - plus interest - to the Trustees of the Masonic Hall and Asylum Fund in Utica, NY.

The interest on the claim dates back to November 2005 and totals $9.2 million.

The fund alleged that Merrill Lynch and its subsidiary broker-dealer Advest Inc. of Hartford, CT, committed negligence, breached their contract and fiduciary duty, and also misrepresented information about the SPhinX Managed Futures Index Fund LP.

SPhinX was a privately held fund of a business unit of the defunct commodities trader Refco of New York and was one of a group of funds that promised investors returns tied to the performance of the Standard & Poor's Hedge Fund Index, according to published reports.

Merrill Lynch's acquisition of the Advest Group in 2005 at the time was widely reported as one of the most difficult and contentious deals in recent years, with Advest brokers leaving in droves.

Source:  InvestmentNews

Full post as published by FinancialCounsel on April 01, 2009 (boomark / email).