An arbitration panel has ordered a former advisor for Merrill Lynch to pay $1.4 million for violating the terms of the firm’s client transition program, reports AdvisorHub.
The Financial Industry Regulatory Authority panel issued its ruling in the case of John M. Palombo, a broker who joined Merrill Lynch in Austin, Texas in 2008. He signed a client transition program (CTP) agreement with the firm in December 2018 and left Merrill two years later to join Baird Financial Advisors.
Merrill Lynch said Palombo had restarted his practice at the new firm rather than retiring as specified as part of the so-called sunsetting agreement he had signed, a retirement package for aging advisors. The three-member FINRA arbitration panel ordered Palombo to forfeit over $595,000 he received under the CTP program plus interest. He will also have to pay $696,000 in what were termed as lost profits for violating the non-compete provisions set out in the agreement as well as over $115,000 for Merrill’s attorney fees.
Palombo had filed his own claim against Merrill Lynch in April 2020 prior to his departure, alleging age discrimination and claiming the firm misrepresented information about the client transition program. His claim was rejected by the FINRA panel, which denied his request for $7 million in compensatory and punitive damages.
Palombo said that he would continue to fight the matter in court, alleging “gross misconduct and overreach” by the arbitration panel.
The Chicago-based securities transition lawyers at Lewitas Hyman have handled hundreds of arbitrations before FINRA and other self-regulatory organizations nationwide. Our unparalleled litigation experience comes from leveraging their industry-specific knowledge developed from working at firms such as Morgan Stanley, UBS Financial Services and EVEREN Securities, serving as outside counsel for some of the world’s largest law firms, and through prior affiliations with the SEC. For more information about our arbitration and litigation services, please contact us at (312) 291-4600 or through our online contact form.