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While Merril Lynch is in the act of challenging an April 3 arbitration ruling on the grounds that the arbitration panel’s chairwoman was biased against Merrill, as reported by Reuters. Apparently new evidence shows Merrill has managed to put its foot squarely where it belongs – in its mouth.
The brokerage giant is challenging the arbitration ruling in favor of two brokers, Tamara Smolchek and Meri Ramazio on the grounds that the arbitration chairwoman, Bonnie Pearce did not properly disclose that she was married to a lawyer, Robert Pearce, who has represented Merill’s adversaries at least five times and won a $1.3 million award against Merrill. However, Merrill’s claims may be trashed as a motion filed by the firm of Wednesday revealed that, in fact, a Merrill lawyer had researched the husband, Robert Pearce, and his prior award against Merrill, before the arbitration ever began.
The discovery was made Wednesday from a filing made by Miami lawyer Peter Homer, and showed that Merrill’s attorney in the Smolchek case, Douglas Spaulding found five pages printed from Robert Pearce’s website, eight days before the first hearing on January 23.
Spaulding also found a copy of the 2003 arbitration award where Merrill was ordered to pay Pearce’s clients $1.3 million in damages over misleading research.
On multiple occasions, Merrill has claimed that it was unaware of Pearce’s relations or the kind of cases her husband pursued before the arbitration hearings in the Smolchek case began.
Marc Dobin, a lawyer in Jupiter, Florida told Reuters, “It’s a screw-up; it hurts their credibility with the judge … You can’t argue arbitrator bias that you didn’t know about if you knew about it.”
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A Merrill spokesman declined to comment to the media over the mess, but commented that “Spaulding had no recollection of accessing this information or reviewing it prior to the hearing.”
Vacating the Smolchek arbitration is critical for Merrill not only because of the $10 million award, but also because the panel criticized in writing Merrill’s conduct towards brokers. More than 3000 brokers left Merrill Lynch after it was taken over by the Bank of America, however not a single claim for vesting of deferred pay was approved by Merrill’s “good reasons” committee, as observed by the arbitration panel.
