In upholding the award to the three Merrill ex-brokers, known as the CBS group, U.S. District Judge Loretta Preska rejected a Merrill Lynch request to throw out the award, granted by a New York Stock Exchange arbitration panel to former brokers Christopher Chung, William Savino and Kevin Brunnock, the Wall Street Journal reported.
“An arbitration award may be vacated only if procured by corruption or fraud, if the arbitrators exhibited evident partiality, were guilty of misconduct or exceeded their power,” Preska wrote, according to the news report. “Because none of these exceptions to confirmation has been established, the court must confirm the award.”
Most of theaward – $12.5 million – was for “lost income and pain and suffering” from Merrill’s action against the trio. The rest was for terminating the brokers’ contract without cause and legal fees, the news report said.
The three brokers were fired in October 2003 for allegedly engaging in market-timing (See Three Garden State Advisors Charged in Merrill Market Timing Follow Up ). The three, who worked at Merrill’s Fort Lee, New Jersey, branch, claimed they were made scapegoats by Merrill, which fired them at a time when regulatory scrutiny over improper mutual-fund trading practices was high on Wall Street, the news report said.