International Financial Advisors Re-File Class Action Against Merrill Lynch

On November 22, 2016, the Plaintiffs in a class action lawsuit filed on behalf of Merrill Lynch financial advisors (“FAs”) who have been harmed by the firm’s changes to its international financial services business re-filed their complaint to include additional information regarding the harms experienced by the class. The case is entitled Perez, et al. v. Merrill Lynch & Co., Inc., et al., Case No. 3:16-cv-00157-RJC-DCK, and was filed in the United States District Court for the Western District of North Carolina. The new Complaint now includes extensive information regarding the changes Merrill Lynch implemented with regard to its international financial advisory business and the misinformation campaign it conducted to keep international FAs from leaving the firm en masse.

Among the allegations made by the class in its new complaint are that: (1) Merrill Lynch intended to severely restrict its international financial advisory business as early as 2010; (2) Knowing that Merrill Lynch was already in serious discussions to restrict its international financial advisory business, Bank of America CEO Brian Moynihan publicly told the firm and its clients that the company was fully committed to global business; (3) Merrill Lynch released several documents to its international FAs that were deliberately positive about the international financial advisory platform and the company’s commitment to same; (4) Merrill Lynch’s new policy changes with regard to its international business had a disparate impact upon employees of protected races and national origin; and (5) Merrill Lynch severely restricted the ability of FAs to perpetuate and grow their international business – in many cases requiring that FAs discontinue business with clients in certain countries entirely.

The class is represented by Shumaker, Loop & Kendrick, LLP’s broker-dealer litigation department led by Michael S. Taaffe. This department of attorneys in Shumaker’s Sarasota, Florida office have investigated and prosecuted cases against Merrill Lynch related to the Change in Control of the company since late 2008. Since that time, Shumaker has represented more than 2,000 former Merrill Lynch FAs located all over the nation related to the payment of their deferred incentive compensation, promissory note disputes, constructive terminations and transitions to other financial services companies. Similar to the investigation of the Perez class action, Shumaker’s broker-dealer litigation team was the first to uncover Merrill Lynch’s fraudulent scheme to deny contractual deferred compensation vesting to FAs following the firm’s acquisition by Bank of America. This fraudulent scheme was described in the $10.2 million landmark arbitration award in the case of Ramazio and Smolchek v. Merrill Lynch, Pierce, Fenner & Smith, Inc., FINRA Case No. 10-04432, where significant punitive damages were assessed against Merrill Lynch due to its fraudulent conduct.

Many of Shumaker’s clients are current or former Merrill Lynch FAs that are located in the United States, but who primarily service clients that are located internationally. Since 2010, Merrill Lynch has privately made decisions regarding changes to its international financial advisory business, while publicly and to its employees projecting the impression that things would remain status quo. The sale of Merrill Lynch’s offshore financial services business to Swiss firm Julius Baer initiated substantial changes to the remaining domestic international business that have significantly harmed the class. Many class members have been forced to seek alternative employment, which has caused them substantial damages, including the loss of deferred compensation and other damages. The Perez class action seeks to hold Merrill Lynch accountable for its significant policy changes that have decimated the class members’ books of international business and ability to grow their businesses internationally, as well as to hold Merrill Lynch to the letter of its compensation contracts with its employees.