FINRA Arbitrators Slam Merrill Lynch Professional Clearing With Massive Damage Award

July 7, 2011

In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in May 2009, Claimants asserted:
  • breach of contract, breach of the implied covenant of good faith and fair dealing;
  • breach of the duty of good faith and reasonable commercial standards of fair dealing - Articles 8 and 9 of the New York Uniform Commercial Code;
  • fraud; and
  • negligence.

The causes of action related to alleged unexpected margin calls that resulted in losses in two hedge funds. Claimants sought at least $90 Million in compensatory damages, plus punitive damages, costs, and fees. At the close of the hearing, Claimants requested $77,717,916.00 in damages.

In the Matter of the FINRA Arbitration Between Rosen Capital Partners LP and Rosen Capital Institutional LP, Claimants vs. Merrill Lynch Professional Clearing Corp., Respondent (FINRA Arbitration # 09-03094, July 5, 2011)

Respondents generally denied the allegations and asserted various affirmative defenses.

The FINRA Arbitration Panel found Respondent liable and ordered it to pay to Claimants $63,665,202.00 in compensatory damages plus interest at the rate of 9% from October 7, 2008 until full payment.