It’s one thing to be on the receiving end of a $1.4 million Finra panel award, it’s quite another to collect.
Merrill Lynch, Pierce, Fenner & Smith has filed an application for writs of garnishment in a claim against John Michael Palombo, an ex-broker who allegedly had joined Baird Financial Advisors just two days after leaving Merrill Lynch in December 2020 in violation of a client transition agreement that required two years between leaving the firm and re-entering the industry.
The writs, naming Robert W. Baird & Co. and Cullen/Frost Bankers as two firms that potentially owe Palombo money, would give them three weeks to tell the court how much they might have, the application said.
Merrill Lynch’s attorney, Matthew I. Penfield of Bressler Amery & Ross in Florham Park, N.J., did not return a call for comment by press time.
According to BrokerCheck, Palombo was suspended indefinitely as of Nov. 21, 2022 for not complying with the Finra panel award. On his LinkedIn page, Palombo describes himself as an independent consultant since November 2022.
“After 30 years as an investment advisor, I’ve decided to apply my experience to help with a different kind of financial service,” he wrote. “I’m working with individuals and institutions as an advocate for financial literacy. No products…just clarity!”
He could not be reached for comment by press time.
In April 2020, before his departure, Palombo filed a complaint with Finra alleging discrimination, retaliation and hostile work environment, fraud and breach of contract relating to a “sunset” agreement he had signed to transition out of working for Merrill Lynch.
On Dec. 16, 2021, a Finra arbitration panel dismissed his complaint and instead found for Merrill Lynch’s counterclaim of breach of contract, breach of duty of loyalty, and unjust enrichment, among other things, and awarded the firm a total of $1.44 million for non-salary compensation, interest, lost profits and attorneys’ fees.
Palombo appealed that decision, but on Sept 30, 2022 the U.S. District Court Southern District of Texas Houston Division issued a final judgement in the matter that denied Palombo’s request to have the Finra panel’s arbitration award vacated.
This week’s writs application asserted that, since the Finra panel ruling in 2021, Merrill Lynch has not been able to collect the award from Palombo, and now would like to approach two financial services firms— Robert W. Baird & Co. and Cullen/Frost Bankers—with the understanding that the two firms owe Palombo some money.
A Feb. 6, 2023 declaration by Merrill Lynch’s attorney stated that he conducted a deposition with Palombo on Nov. 16, 2022. In that deposition, Palombo revealed that while he does possess property in Texas, it wouldn’t be sufficient to satisfy the Finra panel award, Penfield attested. Palombo also indicated he intended to claim a homestead exemption for his property, the declaration stated, which would put it out of Merrill Lynch’s reach.
At the same time, based on Palombo’s responses in the deposition, Penfield said he believed that Robert W. Baird & Co. and Cullen/Frost Bankers owe the ex-Merrill broker money, though to what extent was not clear.