A Financial Industry Regulatory Authority panel has ruled in favor of Merrill Lynch, a current broker and a former broker in a dispute with two clients, who had accused the firm and its brokers of negligence, fraud and other infractions while handling their investments.
In its Dec. 13 decision, the FINRA panel dismissed the clients’ claims “in their entirety with prejudice.” The claimants were Ilir Hasani and Ivana Vanacova, described in the panel’s decision as two European women who opened up a brokerage account with Merrill Lynch.
Respondent Michael Wasserman served as their financial advisor during the time cited in the clients’ complaint; he remains a broker with Merrill Lynch, according to his profile at FINRA’s BrokerCheck website.
Respondent Matthew Ian Warshaw dealt briefly with the clients at the start of their relationship with Merrill Lynch and was not their financial advisor at the period cited in the dispute; he left the firm (to join Raymond James) before the claims were made, according to BrokerCheck.
Hasani and Vanacova accused the firm and the brokers of negligent misrepresentation, fraudulent misrepresentation, unfair and deceptive practices in securities transactions, breach of contract and more, according to FINRA. In a Joint Amended Statement of Claim, the claimants added a claim of failure to supervise.
The claimants had deposited a “substantial amount of money” into their Merrill Lynch account with the availability of margin borrowing, according to FINRA.
There was evidence presented during the dispute that showed the claimants received written disclosures when the account was opened, describing the firm’s margin lending program, including the risks associated with margin, the margin rate and how margin functioned, the panel said in the decision.
What Went Wrong
From the start, the claimants had said they wanted to invest in stocks of their own choosing and “made clear” to Wasserman that they knew what they wanted to invest in and were confident of their success, according to the FINRA panel.
They bought shares in several companies that initially increased in value. But, when the stocks went down, the women increased their positions in the stocks, informing Wasserman they believed when stocks lost value was the best time to increase their investment in them, according to the FINRA panel.
While the account was open, the claimants made all investment decisions on their own, and “neither sought nor did they receive advice” from Wasserman on what to invest in or how to manage their portfolio, the panel said.