Merrill Lynch owes US$3.6m to heiress

Last updated 12:07 13/09/2012

Relevant offers

World

JetBlue sued by ex-pilot who had midair meltdown Kiwi charged in Sydney over corruption allegations Apple's Tim Cook will give away his money Nutritionists slam Warren Buffett's junk-food investments Posthumous Brittany Maynard video supports assisted-suicide bill Kraft Foods to merge with HJ Heinz in US$46b deal HJ Heinz owner in Kraft takeover talks Inside Cadbury's chocolate factory Weak US business spending points to growth slowdown No hide-and-seek at Sydney Ikea

Merrill Lynch must pay US$3.6 million ($4.4 million) to an heiress from Brazil who said she lost tens of millions of dollars due to unauthorised trades made by her brother in her account, a securities arbitration panel has ruled.

The ruling, by a Financial Industry Regulatory Authority arbitration panel on Tuesday, is the outcome of a case filed in 2008 in which the heiress, Camelia Nasser de Kassin, asked for more than US$21m in damages.

The case was filed in the name of Sophin Investments SA, a company set up to handle an inheritance Kassin received from an uncle, according to her lawyer, Barry Fischer of New York.

A spokesman for Merrill Lynch, a unit of Bank of America Corp, declined to comment.

The FINRA ruling is just one facet of a larger battle between members of the prominent Nasser banking family from Brazil and Merrill Lynch over various and steep trading losses.

Merrill, in addition to its involvement in the arbitration case, sued three members of the Nasser family in 2008 for massive trading losses, leading to a US$99m judgment that was recently upheld by a New York appeals court.

In the FINRA arbitration, Sophin accused Merrill Lynch of letting her brother, Ezequiel Nasser, make US$389m in unauthorised trades thought accounts at two Merrill Lynch units, according to Fischer.

Nasser, who invested in risky securities such as naked puts in Bear Stearns and Lehman Brothers - a type of options strategy - ultimately left a deficit totalling between US$10.4m and US$11.4m in the two accounts.

Sophin accused Merrill of not supervising its staff, trading without authorization and civil fraud, among other things, according to the arbitration award. Merrill denied the claims and filed a counterclaim against Sophin for breach of contract, seeking a total of US$5.5m for the deficits in the two accounts.

Arbitrators, in the decision on Tuesday, found both parties liable. While Merrill must pay Sophin US$6.1m, Sophin must pay Merrill US$2.5m. The panel admonished Merrill for "lapses in record keeping and supervisory procedures" but said they did not indicate a widespread problem at the company.

Fischer, Kassin's lawyer, said he is "disappointed greatly" by the decision. "The magnitude of the award doesn't make up the damages that Merrill Lynch caused," he said.

Dow Jones reported the award earlier on Wednesday.

Ad Feedback

- Reuters

Special offers

Featured Promotions

Sponsored Content