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FINRA orders former Merrill Lynch broker to pay firm $1.5M

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FINRA orders former Merrill Lynch broker to pay firm $1.5M

The Financial Industry Regulatory Authority ordered ex-Merrill Lynch broker Jeffrey Fratarcangeli to pay the firm back the $1.5 million balance of his signing bonus from when he joined in 2008, AdvisorHub reported.

Along with interest, Fratarcangeli will need to pay back the Bank of America Corp. wealth management unit $1.64 million, which the firm sought. The amount is a "forgivable" loan but Fratarcangeli, who left to become an independent broker, breached his loan promissory note by resigning and leaving the unamortized loan balance unpaid. The broker also needs to pay the firm an additional $308,000 in legal fees and other related expenses.

On the other hand, the FINRA panel sided with Fratarcangeli regarding two customer complaints tied to a Merrill commodities product, granting the broker expungement of the complaints. He was also granted $100,000 in compensatory damages.

In his defense of the promissory note arbitration claim, Fratarcangeli asked his arbitrators to recommend that FINRA enforcement look into Merrill Lynch's MLCX commodity index funds. His defense claimed that there were issues regarding MLCX's structuring, sales and compliance efforts. He also filed a counterclaim, seeking more than $21.3 million, alleging that his former employer committed, among other infractions, negligent supervision, defamation and slander, and violations of the protocol of broker recruiting.

Fratarcangeli is now affiliated with Wells Fargo & Co.'s Wells Fargo Advisors Financial Network LLC.