Buoyed by $3-Mln Whistleblower Award, Ex-Merrill Duo Clears Their Record
A Financial Industry Regulatory Authority arbitrator granted this week expungements of 10 customer complaints–five each–for two UBS Wealth Management USA brokers, who in 2019 won a related $3 million whistleblower award from the Securities and Exchange Commission.
The duo filed in September last year to clear their record of the 10 complaints related to the same product.
In the July 22-issued award, the arbitrator, Leon Fox, justified granting the expungements on the basis that the firm, and not Ringwall and Manion, was at fault.
The structured notes “were flawed in their design, due to hidden costs,” the award states. Ringwall and Manion “testified credibly that they were diligent in investigating issues with the structured notes,” and some customers who were sold the products remained their clients and wrote emails in support of the expungement, Fox said. The arbitrator also cited their work acting as whistleblowers in his reasoning.
Neither of the brokers returned a request for comment. Jennifer Farrar, their Tomball, Texas-based lawyer who represented them at the Finra arbitration, did not provide a comment for this story by press time.
Merrill brokers, who sold around $150 million worth of the notes to around 4,000 customers in 2010 and 2011, according to the SEC settlement, have had success in clearing the complaints from their record. In another recent case in March, an arbitrator made similar comments in clearing the record of two former Merrill brokers in Vermont.
The volatility-linked notes, which had a 2% commission and .75% trail, were billed as low-cost investments in firm marketing that was “materially misleading,” the SEC said in the settlement. The products also led to steep losses for many customers.
Ringwall and Manion surreptitiously taped calls with Merrill executives, who told the two not to suggest to complaining clients that the structured notes were flawed, according to the Wall Street Journal, which reported their role in the SEC settlement in 2019.
Manion, a 27-year industry veteran, started in 1994 at Dain Bosworth, and moved to Merrill in 1996, according to BrokerCheck.
Ringwall, a 33-year industry veteran, started in 1988 at Blinder Robinson, but moved after one year to J.E. Liss & Company, where he stayed for five years, all prior to the firm being expelled from the industry in 2002, according to BrokerCheck. In 1994, Ringwall moved to Robert W. Baird, and two years later to PaineWebber, where he stayed until his 1997 move to Merrill, according to BrokerCheck.
In comments about the related complaints on their BrokerCheck records, Ringwall and Manion posted duplicate responses: “This complaint arises from the clients dissatisfaction with a structured product created by my former firm linked to the ‘Investable Volatility Index.’ I committed no wrongdoing nor violated any security rules of any kind and did not contribute to the settled claim. I appreciate the involvement of the Regulatory Agencies and feel exonerated by their enforcement actions related to the product.”
The two named UBS as the respondent in their complaint as a procedural matter.
A spokesperson for UBS declined to comment. The firm did not participate in the arbitration and did not object to the expungements, according to the arbitrator’s award.