Finra arbitrators have ordered Merrill Lynch to pay around $2 million in a claim related to the sale of Puerto Rico bonds.
In a claim filed in 2017, Ángel and Windy Pagán accused the wirehouse of gross negligence, breaches of fiduciary duty and contract, violations of Puerto Rico and state securities laws and other infractions in connection with their investments in Puerto Rico municipal bonds and closed-end bond funds, according to an award document published by Finra.
The Puerto Rico bond market collapsed in 2013.
Angel Pagán is a former Major League Baseball outfielder, played for the San Francisco Giants, starting in 2012 and retiring after the 2016 season. He previously played for the Chicago Cubs and New York Mets.
The Pagáns sought compensatory damages in excess of $2 million plus growth and income they would have earned had the money “been properly invested,” punitive damages of $6 million, disgorgement of all commissions, margin interest and other fees connected to the investments, as well as lawyers’ fees and costs, Finra says.
Merrill Lynch requested that the claim be denied, as well as the expungement of any record of the arbitration from the record of Alex Gierbolini, who’s not party to the suit, according to the award document.
Last week, Finra arbitrators ordered Merrill Lynch to pay the Pagáns around $1.7 million in compensatory damages, 4.5% annual interest on that amount from June 20, 2017 through the date of the award, $88,760 in costs and $750 for the Pagáns’ Finra filing fee, the regulator says. The arbitration panel also denied Merrill Lynch’s request for expungement of Gierbolini’s record, according to the award document.
Gierbolini, who’s been registered with Merrill Lynch since 2012, racked up 24 customer disputes during his 22 years in the industry, according to BrokerCheck.
All but two of the disputes have been filed since 2014, with several of them specifically referring to the sale of Puerto Rico bonds and closed-end funds. Six claims remain pending, while the rest of the claims filed since 2014 have been settled for amounts ranging from $22,000 to $1.1 million, according to BrokerCheck.
Merrill Lynch is far from the only firm involved in paying out millions in arbitration claims arising from the sale of Puerto Rico bonds and closed-end funds. Over the past year, Finra arbitrators have also ordered Morgan Stanley and UBS to pay out millions in claims involving Puerto Rico bonds.