May 8, 2013

Peter Roeser shared insights with The Wall Street Journal on an arbitration victory in which he secured thousands of dollars on behalf of his client in a case relating to a breach of a promissory note.

The Financial Industry Regulatory Authority (FINRA) awarded former Merrill Lynch employee Jeffrey Wescott over $230,000 in compensatory damages and denied and dismissed all of Merrill Lynch’s claims against him for breach of a promissory note. (Merrill Lynch, Pierce, Fenner & Smith vs. Jeffrey R. Wescott FINRA No. 10-04592, April 29, 2013). Wescott was represented by Darrell Graham and Roeser.

Merrill Lynch alleged that Wescott, who joined the company in 2007, breached a promissory note and owed it over $650,000 in principal, interest and attorney fees. In his response, Wescott denied that he owed any money under the note on the grounds that the note was intended to be tax deferred compensation. He further asserted that the note was non-recourse secured exclusively by his monthly compensation and, as such, Merrill Lynch was barred from collecting after he left the company. The April 29 FINRA award did not explain the basis for its ruling but agreed with Wescott that there was no liability under the promissory note, stating only that Merrill Lynch’s claims on the note “each and all, are hereby denied and dismissed with prejudice.”

Roeser told the Journal that Wescott was lured to Merrill Lynch’s Private Banking and Investment Group under a series of false statements and under the guise that the bank would be able to service his high-net-worth clients. But once he got to Merrill Lynch the company refused to do that type of business, effectively turning Wescott into a broker, and caused him to suffer considerable damages.

Graham said that “it is fundamentally wrong for a company to make material representations to a prospective employee during the recruitment process and later claim that the employee has no right to rely on those representations.” He went on to say that “the law does not countenance such employment practices.” FINRA awarded Wescott $232,505 in compensatory damages on his counterclaims. It also required Merrill Lynch to pay all of the forum fees totaling $12,000.