Merrill Lynch & Co. (NYSE:MER – News), the biggest U.S. brokerage, will pay $331,000 to a former client in Los Angeles to settle claims that a broker mishandled his investments, according to a NASD arbitration document.
Gene Hines, a writer-producer, filed a claim against Merrill on Nov. 26, 2001, which accused the firm of breach of fiduciary duty and failure to supervise broker Milan Vukovic.
Specifically, Hines alleged that Vukovic convinced him to purchase an “unsuitable” investment product for his retirement account and failed to honor a stop-loss mechanism designed to protect his stock investments.
New York-based Merrill, which denied any wrongdoing, dismissed Vukovic in light of the case.
A three-person arbitration panel from the NASD, formerly known as the National Association of Securities Dealers, finalized its decision on Monday. Lawyers representing Hines announced the award in a news release on Thursday.
“Mr. Hines is a sophisticated and intelligent guy who basically turned over his assets to a broker who then did everything he said he wasn’t going to do,” said Philip Aidikoff, who represented Hines in the case.
It is not the first time a Merrill Lynch broker in California has been accused of mishandling client money. In July 2002, a broker at the firm’s Newport Beach office was ordered to pay $675,000 to settle allegations he transferred client funds into his own accounts.
“We are disappointed with the decision,” said Merrill spokesman Mark Herr, referring to the Hines matter. He declined to comment further.
The NASD panel ordered Merrill to pay Hines $289,000 in damages plus $41,704 in interest.
Neither Hines nor Vukovic could be reached for comment.