An independent Ameriprise advisor fended off a $247,000 clawback sought by his former employer, Merrill Lynch, according to a FINRA arbitration panel's decision made in his favor this week.

After determining that Merrill had wrongfully terminated advisor Rene Espinoza, the panel also ordered the expungement of his U5 form on his BrokerCheck record.

"The fact that the panel ruled in Mr. Espinoza’s favor and against Merrill Lynch on all of these claims is a significant victory for Mr. Espinoza," Peter Roeser, an attorney with Roeser Bucheit & Graham who represented Espinoza during the case, says in an email.

A Merrill Lynch spokesman says the firm disagrees with the decision.

Espinoza, however, did not win on every count. The panel rejected his counterclaims for at least $1.2 million in alleged damages for breach of employment agreement and loss of business due to Merrill's solicitation of his clients.

Espinoza had been at Ameriprise from 1999 to 2010, when he left to join Merrill, according to BrokerCheck records. The wirehouse and its new employee then had a falling out over proprietary annuities that his clients had bought while at Ameriprise, records show. A client complaint about the surrendering and replacement of annuities led to an investigation by Merrill, according to arbitration records. In July 2011, the wirehouse discharged him for alleged "conduct relating to the surrender of annuities and the submission of annuity orders," according to a disclosure submitted in his BrokerCheck records by Merrill.


Firms often seek reimbursement for failure to pay promissory notes issued as part of recruiting packages to advisors who have left or were discharged. Merrill filed its claims with FINRA in July 2011, according to arbitration records. During the arbitration process, Espinoza made claims of his own, including a request to have the termination records expunged.

After reviewing submitted evidence, the panel granted his request, saying that the termination note could appear to be defamatory. The panel found that Merrill's written policy was not violated and its system for replacing annuities was not designed to deal with replacement orders from a recruited advisor with clients holding proprietary annuities bought at a prior firm. The client complaint and subsequent investigation by Merrill was caused by the firm's "confusing policies and process," and the advisor's failure to adequately monitor the situation, the panel determined.

The panel recommended that the termination form explain that an arbitration panel reviewed the evidence and found that although the wirehouse terminated his employment for conduct with regard to surrendering annuities, "no reasonable basis existed to support [Merrill's] determination that such conduct had constituted grounds to terminate the registered person for cause."

Attorney Roeser says this was a necessary win for his client in order to have an "accurate and clean record." "This was critically important to Mr. Espinoza who, like other financial advisors and professionals, relies on the goodwill and reputation he has built up over his 17 year career," Roeser says.

In 2011 Espinoza returned to Ameriprise where he is based in Tempe, Ariz., as an independent advisor, according to the firm's website and FINRA records.

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