Bill Singer's New Registered Rep Magazine

June 23, 2011

Registered Rep Magazine

Street Legal by Bill Singer


The Regulatory Semantics of Customer Complaints

The first domino in this cascade of disaster fell on Sept. 17, 2008, when an unidentified Merrill Lynch registered representative received an email customer complaint. It said that the representative had entered an unauthorized order for Fannie Mae preferred stock instead of Fannie Mae bonds, and it requested a meeting with a Merrill manager.

In keeping with Merrill's protocols, the representative told an administrative manager about the email. The manager logged the incident into Merrill's central complaint system, an acknowledgment was sent to the customer, and a lawyer from the firm's Office of General Counsel (OGC) was assigned to the matter.

On Sept. 24, Managing Director Joseph Mattia and the Merrill representative met with the client, and Mattia agreed to settle the complaint. (Subsequently, the client was offered $9,198.) Hey, things happen in our biz. The broker swears she said one thing. The client swears he heard another. No one is budging. Eventually, the member firm writes out a check. Life goes on, and, hopefully, future commissions compensate for the settlement.

Case closed - or so you would think. How could something possibly go awry after the firm and the customer had agreed to settle the dispute?