(Reuters) - Former Red Sox catcher Doug Mirabelli has earned another victory, this time off the field.
An arbitration panel ruled on January 13 that Merrill Lynch must repay Mirabelli more than $1.2 million in damages and fees for providing inappropriate investment advice to the two-time World Series champion and his wife, Kristin.
“It’s rare for a FINRA (Financial Industry Regulatory Authority) arbitration panel to award every dollar amount of out-of-pocket loss,” said Barry Lax, Mirabelli’s lawyer, in an interview.
Lax estimates that less than 5 percent of the cases he has dealt with in his roughly 20 years in the industry have resulted in this type of full-repayment ruling — where the claimant receives the complete original investment, in addition to all legal fees and associated arbitration costs.
“The panel basically put the Mirabelli’s back in a position that they would have been in had they never met Phil Scott (the Merrill Lynch adviser),” he said.
The case was argued against one of Merrill’s top advisers, Scott, a Bellevue, Washington-based broker who has been with Merrill for nearly three decades. Scott was ranked the top adviser in Washington State last year by Barron’s and managed about $1.1 billion in client assets.
The Mirabelli’s invested about $1.8 million, all of their liquid assets, with Scott in early 2008, according to Lax. Scott then put those assets into his team’s income portfolio, which is made up of 33 dividend-paying growth stocks.
Because the account was collateralized through loans, if the value of the account fell below $1 million in value, they would need to sell out of the securities held in the accounts — which is what happened in November 2008, amid an industry-wide meltdown of financial markets.
The result was a roughly $800,000 loss for the Mirabelli’s.
Lawyers for the couple argued that Scott put the Mirabelli’s assets in “inappropriate” investments, offering the recommendation and purchase of unsuitable securities; in this case, an all-growth stock portfolio.
Merrill Lynch spokesman Bill Halldin said the firm disagreed with the panel’s decision, given the facts presented in the case.
“This account was handled properly during a very difficult time when there was extreme market volatility,” he said.
Reporting By Ashley Lau; Editing by Bernard Orr