Arbitrators Award $750,000 for Annuity Sold to 96 year old

Danks vs. Merrill Lynch

DANKS v. MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., NASD ID #01-06242 (Boca Raton, 1/22/03).

On claims relating to the propriety of a single, large investment by a 96 year-old decedent, a three-person Panel grants compensatory damages of $606,682, plus pre-judgment interest of $143,318.

The say-nothing “Case Summary” in this Award recites the names of three causes of action and indicates the product involved was an annuity. The pleadings and other submissions in this matter describe a bitter dispute following the death of the accountholder, Robert Danks, one which spilled into the probate courts and led to accusations of wrongdoing and greed on both sides.

At base, though, the issue for the Arbitrators was simple: was Mr. Dank’s purchase of a single premium immediate annuity suitable? Under this annuity, Mr. Danks paid $720,000, leaving approximately $400,000 in a Merrill Lynch trust account, and secured the right to a monthly payment of approximately $20,500 for the rest of his life. No death benefit attached to this investment, so, when Mr. Danks died seven months later, the annuity ceased.

Merrill Lynch maintained that Mr. Danks was “obsessed with the fear that he could live for several years and that he would run out of money before he died.” Moreover, Merrill maintained, Mr. Danks did not care about leaving an estate. Thus, this annuity addressed his financial concerns.

However, Mr. Danks’ daughter, Evelyn Danks Corbetta, who became personal representative of the estate, asserted that Respondents “liquidated Mr. Danks’ equity portfolio and sold him… a high commission product which could not possibly have been suitable for someone of Mr. Danks’ age and financial situation.”

Although the Statement of Claim alleges it, the Award fails to acknowledge a state securities claim in the “Case Summary” section and the Arbitrators, while sustaining “claims of negligence, negligent supervision and breach of fiduciary duty,” are silent about the disposition of that claim, except to say that “any and all claims for relief not specifically addressed herein, including claimant’s request for punitive damages, are denied.” Presumably denied as well was an expungement request relating to the unnamed broker. Forum fees are equally split between the two sides.


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Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.

He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page -, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.