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Merrill Lynch's $100 Million Stock Loss Suit is Thrown Out

March 20, 2019

A Finra arbitration panel has ruled in favor of Merrill Lynch in a case brought by the estate of one of its former brokers claiming $100 million in losses in the company’s stock because of its exposure to mortgage-linked securities during the financial crisis, according to news reports.

The arbitrators dismissed the case, ruling that Christina Billington, the trustee for the James A. Billington Trust, waited too long to bring the claim, InvestmentNews writes. The panel said a claim must be filed within six years of the events causing the loss, according to the publication. In January 2009, James Billington sold his stock in Bank of America, which acquired Merrill Lynch during the financial crisis, InvestmentNews writes. He died in September 2014 and his widow filed the claim in June 2017, according to the publication.

Mike Taaffe, partner at Shumaker Loop & Kendrick and Christina Billington’s lawyer, says the panel “appeared to take factual findings based on argument, not testimony or evidence” and tells InvestmentNews that he and his co-counsel may take the case to court. A spokesman for Merrill Lynch declined comment to the publication.

The wirehouse has had more than six dozen cases brought against it involving Merrill Lynch executives, claiming around $400 million in losses in their brokerage accounts as a result of losses in Merrill Lynch stock in 2007 to 2008 caused by the firm’s exposure to mortgage-backed securities and subprime mortgages, InvestmentNews writes.

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The plaintiffs claim that Finra should use 2014 instead of 2009 in setting the statute of limitations on the claims, according to the publication. The Department of Justice settled with Merrill Lynch for $17 billion that year in the original case involving the mortgage-linked securities, InvestmentNews writes.

Four arbitration panels have granted Merrill Lynch’s motions to dismiss the claims thus far, but 15 have denied them, according to the publication.

By Alex Padalka
  • To read the InvestmentNews article cited in this story, click here.