Merrill Lynch & Co. former Co-President Ahmass Fakahany, who oversaw risk management as losses began to mount on subprime mortgages and bonds in 2007, was denied most of his demand for $70 million in compensatory damages, an arbitration ruling shows.
Fakahany will instead get $1.2 million, three arbitrators at the Financial Industry Regulatory Authority wrote in a March 24 order on the brokerage-regulator’s website. He had pressed the firm to pay him for work and make good on promises, the document shows. The order doesn’t explain the panel’s reasoning.
Fakahany’s attorney, John Orsini in New York, disputed the $70 million figure that arbitrators listed on the order, saying in a phone interview yesterday that it’s “totally incorrect.” He declined to elaborate or to comment on the ruling.
Bank of America Corp. (BAC), based in Charlotte, North Carolina, acquired Merrill in January 2009 after losses surged at the New York-based brokerage. Fakahany, 52, had announced his resignation a year earlier. In an interview last year, he said Merrill had enhanced risk oversight before mortgage losses eroded its capital.
“This was a compensation matter that predated Bank of America’s acquisition of Merrill,” said Bill Halldin, a company spokesman. He declined to comment on the panel’s ruling.
Fakahany was promoted to co-president in May 2007 by Merrill’s then-chief executive officer, Stanley O’Neal. O’Neal was ousted in October 2007, and the company later posted a $9.8 billion loss for that quarter. He filed the arbitration claim in December of 2008, also naming Bank of America among defendants, according to the panel’s order.
To contact the editor responsible for this story: David Scheer at email@example.com