Merrill Lynch Financial Advisors Settle Compensation Class Action for $12.8 Million

For additional comment, please contact Michael S. Taaffe, Esq. at (941) 364-2770, or by email at

The $12.8 million settlement between Merrill Lynch and a nationwide class of financial advisors who were terminated without being afforded certain contractual deferred compensation rights has been approved by Judge Conrad, Federal District Judge for the Western District of North Carolina. The settlement, which provides monetary relief for terminated Merrill Lynch financial advisors, was brought by plaintiffs Benjamin Davis of Charlotte, NC and Roberto Garcia of Miami, FL on behalf of a class of 273 ex-employees. The plaintiffs were represented by Michael S. Taaffe, Esq. of Shumaker, Loop & Kendrick, LLP (“SLK”), chair of the broker-dealer litigation team. “The settlement will assist many financial advisors who lost their jobs after the merger with Bank of America, many of whom were driven from the industry entirely,” said Taaffe.

The class members will receive a substantial portion of their unvested deferred compensation from Merrill Lynch as part of the settlement. After Merrill Lynch’s acquisition by Bank of America, it terminated several hundred financial advisors without affording them certain contractual rights. Additionally, the settlement’s programmatic relief will require Merrill Lynch to honor its deferred compensation agreements with approximately 6,500 financial advisors still employed if they are terminated in the future. Notably, the class action settlement also included over 50 class members who had previously released the class claims without knowledge after their termination.  Approximately 90% of the eligible class members participated in the class settlement, with only 2 opting out and no objectors.  “To Merrill Lynch’s credit, once confronted with this action, the firm and its attorneys worked in good faith to resolve the claims favorably for its ex-employees and to develop a process going forward to benefit its current employees” commented Taaffe.  “We are pleased that in the end, Merrill Lynch did the right thing for its FA’s.”

Class Representative Benjamin Davis could not be happier with the outcome. “This was a great settlement achieved by the SLK attorneys” said Davis, “All the class members I’ve spoken with are pleased with the outcome.”  Class Representative Roberto Garcia echoed these sentiments. “The SLK broker-dealer litigation team worked tirelessly to help the former advisors, many of whom did not realize they had a claim upon termination.” Said Garcia. “This is a great result.”

Merrill Lynch’s deferred compensation agreements with its financial advisors provided that in the event of termination after the merger, they would be afforded an opportunity to challenge Merrill Lynch’s vesting determination.  These were important contractual protections, especially after a merger. If the financial advisor made a successful challenge, their compensation would not be forfeited but instead paid in cash lump sum. Merrill Lynch ignored these protections by simply terminating financial advisors and forfeited their deferred compensation without permitting the contractual challenge of the company’s action. “Regardless of the stated reason, these FA’s had the right to challenge whether the company handled their termination correctly,” said SLK partner Michael D. Bressan, Esq.

The settlement represents another victory for SLK on behalf of former Merrill Lynch financial advisors related to the change in control of the company. Since late 2008, the SLK broker-dealer litigation team has represented more than 2,000 ex-Merrill Lynch financial advisors and has reviewed more than 6 million pages of documents related to the change in control of the company.  SLK has prosecuted claims on behalf of financial advisors regarding: compensation and deferred compensation issues, promissory note disputes, disciplinary issues, transitions to other financial services firms, and related industry matters. One such FINRA arbitration award confirmed in 2012 (Merrill Lynch vs. Smolchek, USDC So.Dist. Fla. 12-80355 confirming award regarding FINRA Case No. 10-04432) yielded significant attention in the financial services industry, as Taaffe’s team achieved an award of $10.25 million, including substantial punitive damages, for two financial advisors related to Merrill Lynch’s improper treatment of its advisors following the Change in Control of the company.

“Merrill Lynch financial advisors deserve their company to honor the contracts that form the basis of their employment,” said Taaffe, “we hope that this class action has the added benefit of changing the attitude of the company moving forward.”