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Bank of America's hurried 2008 acquisition of Merrill Lynch continues to plague the bank and its stockholders.
The latest hiccup comes courtesy of Mike Taaffe, a Sarasota attorney. Taaffe recently discovered a cottage industry representing Merrill Lynch brokers who claim they were cut out of deferred compensation and stock awards they were entitled to when they left the firm after the sale. Taaffe, a business litigation attorney with Shumaker, Loop & Kendrick, specializes in disputes between firms and departed brokers.
And the Merrill Lynch departures are a doozy.
The situation, says Taaffe, hinges on a clause in Merrill Lynch broker's contracts known as “good reason.” Before the BofA sale, brokers who left Merrill to work for competing firms weren't entitled to equity compensation plans they had vested in, Taaffe tells Coffee Talk. But anyone who left for a good reason, say a sale to a behemoth bank with a polar opposite sales and corporate culture, should still receive his Merrill Lynch stock and awards, Taaffe argues.
The Financial Industry Regulatory Authority, which oversees more than 4,500 brokerage firms nationwide, agrees with that argument — at least it did in the first case Taaffe recently brought before FINRA.
In that arbitration hearing, a panel awarded two Fort Lauderdale-based Merrill Lynch brokers $1.167 million in deferred compensation awards. The brokers left Merrill a few months after the BofA sale to work for Morgan Stanley.
“This is the first of many cases like this,” says Taaffe, who estimates he currently represents at least 40 former Merrill Lynch brokers, including 15 on the Gulf Coast. “It's a big part of our practice right now.”
And it could get bigger: Taaffe says there is no time limit on when a broker leaves Merrill Lynch to have an opportunity to recoup compensation awards, as long it falls under the good reason clause. Attorneys for Bank of America couldn't be reached for comment.
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