Man says he got bad financial advice
"Grow. grow. grow. save. save. save."
Gene Murdock, of Evans, recently was awarded a settlement by an arbitration panel for money he lost on the advice of a friend and Merrill Lynch broker.
Photo by Jim Blaylock
That was Gene Murdock's financial mantra, he said, and part of the reason he transferred all of his financial dealings to Merrill Lynch in 1990, with his longtime friend and broker,Joseph Harris II, guiding the way.
"I 100 percent implicitly trusted him and Merrill Lynch. Why shouldn't I?" said Murdock, who is a former Army colonel and current nurse anesthetist and instructor at the Medical College of Georgia. "Joe would say, "Of course, you should trust us. Your patients trust you.'"
But these days, Murdock, an Evans resident, says the trust and friendship he once had are gone. He says he feels he was taken advantage of by his broker, and recently he won a settlement involving Merrill Lynch. An arbitration panel's ruling in January found Merrill Lynch negligent, according to a letter Murdock received from the National Association of Securities Dealers.
Murdock didn't want to disclose the exact amount of the settlement, but he initially had sought more than $1 million involving the case.
Murdock said the case started in August 2000 when he called his broker from the deck of his new houseboat on Thurmond Lake asking to remove 40 percent, or a million dollars, from his accounts to pay off his houseboat, pay for his daughter's college education, pay off the mortgage on his Evans home and for an extra $250,000 to put into a safe, interest-bearing account.
Murdock said Harris repeatedly talked him out of the idea.
"On a golf trip to Hilton Head Island, (Harris) told me as my friend and adviser that he strongly advises me not to do it," Murdock said.
In hindsight, he said, he believes the move was purely financial to ensure that Harris and the firm were making money from his investments.
"I got lied to. I got taken so they could line their own pockets," Murdock said, adding that he is a conservative investor.
Harris deferred all calls for comment to Merrill Lynch spokesman Mark Herr, who disagreed that Murdock was a conservative investor.
"Murdock identified himself in his own words as an 'aggressive investor' and lived up to it, refusing to listen to the advice our financial adviser gave him and not diversifying, even though he was advised to do so," Herr said. "Mr. Murdock's getting any award at all was a case of catching lightning in a bottle."
Murdock said his investments, which totaled $3 million at the height of the dot-com frenzy in August 2000, began dropping largely by October. All the while, Murdock said, Harris was advising him to purchase technology and communication stocks.
"Joe said, 'Technology and communication is where it's at,'" Murdock said. "He said I'd be getting in on the ground floor and they'd zoom. And they did zoom."
Herr said the problem, however, was that a bull market quickly turned into a bear market, which caused many people to lose money.
"When we have a bear market, the number of claims goes up," Herr said, referring to people like Murdock who file lawsuits or file for arbitration panel decisions. "In bull markets, the number of claims goes down. As a result of the stock market bubble bursting in 2000, we had a surge of claims across the industry. This is just one of the claims in which an investor sought to blame their financial adviser for the losses."
Murdock said his account had dwindled to $1.7 million in February 2001 and was at just below $500,000 by mid-2002.
He said many of his friends, who also had accounts with Harris, left Merrill Lynch and asked him why he was staying with the firm.
Murdock said he finally left Merrill Lynch because he was beginning to have health problems concerning his losses.
While unable to sleep one night, Murdock said, he watched C-SPAN, where three Merrill Lynch employees were testifying before Congress. Murdock said he called an attorney that he had read about and began the nearly two-year arbitration proceedings.
"I'm the one that trusted them and was taken in," Murdock said. "I got duped."
Although Murdock eventually received a ruling in his favor through arbitration, he still has problems with the way things turned out.
"I'm not wrong," Murdock said. "But I was not made whole again."
Murdock said he now is awaiting a response from New York State Attorney Eliot Spitzer, who has successfully prosecuted many brokerage firms. Murdock said he is waiting to hear how the panel reached the amount it decided on in his case.