Merrill Brokers Getting Mixed Messages

by Paul Springer

With financial markets in turmoil and the finance industry being wracked with layoffs, brokers at Mother Merrill have enough to worry about, especially given the beating parent company BofA has taken recently. But now they’re getting mixed messages about their future.

BofA CEO Brian Moynihan is on a campaign to calm alarmed employees – and customers. Both groups could suffer from backblast from the bank’s ill-fated acquisition of financial stink bomb Countrywide Financial.

A Merrill broker in New York told Reuters of doubts about talking points the bank created to make customers feel better:

“The bank says we’re building a fortress balance sheet and maybe it’s true, maybe it’s not. What’s irrefutable is that losses and lawsuits are coming out of the woodwork,” said the broker, who requested anonymity because he is not authorized to speak publicly about internal matters.

FOX Business Network says Merrill brokers are getting a different message from the outside world:

Brokers at Bank of America’s Merrill Lynch unit are being targeted by rival firms where recruiters are using the bank’s recent troubles in their pitches to get brokers to jump ship.

Some of Merrill’s brokers are worried about having their pay tied to the bank’s performance, FOX says, while others were already frustrated with the big institution’s bureaucracy:

“Many brokers who have stayed through the Bank of America transition may now be thinking twice,” another veteran broker said. “I know I am.”

Quitting or being fired is an uncomfortable process in financial sales and trading. Brokers are always looking for a better payout, and brokerages fear employees will skedaddle with valuable customers, proprietary information and trading data.

An ongoing legal battle shows how much is at stake when key personnel change places. Bond honcho Jeffrey Gundlach got sued by Trust Company of the West (TCW) after he left to work at a rival firm, and he returned fire with a suit of his own demanding $500 million in damages.

Gundlach is accused of stealing client data and prop trading platforms, The New York Times says. Although not usually contractually kosher, brokers and traders have been known take all the client info and account records they can in hopes of enticing clients to come with them to the new firm.

Gundlach maintains that TCW conspired to fire him improperly in order to retain huge management fees.

The trial is the one to watch these days, according to The Times:

The trial has proved unusually exciting for a white-collar civil case, with some testimony resembling that of a bitter divorce proceeding. TCW lawyers have told the jury about a private jet trip Mr. Gundlach arranged for members of his team in 2009 to Marfa, Tex., where they smoked cigars, drank costly wine, viewed art collections and, the lawyers contend, plotted to leave TCW.

The Times says a TCW lawyer alleged that Gundlach departed with a trading system whose value was in line with the recipe for Kentucky Fried Chicken, while Gundlach more or less argues that he puts MBS analysis programs together in his sleep.

The trial is ongoing. One thing is for sure – Merrill’s brokers may have some tough choices ahead of them.

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