The Wall Street Job Report

Former Boston Red Sox backup catcher Doug Mirabelli was part of the team winning two World Series. Now he’s gotten another big win — a $1.2 million award from a financial advisor in an arbitration case.

Mirabelli, who is referred to in a Wall Street Journal article on the case as “Douglas Mirabelli,” something he was probably never called during his baseball career, won a Financial Industry Regulatory Authority case against Phil Scott of Merrill Lynch. In March 2008, Mirabelli and his wife had invested $1.8 million – one million of it in loans from Merrill Lynch – in the “Merrill Lynch Phil Scott Team Income Portfolios, a collection of 33 dividend-paying growth stocks,” the New York Times Dealbook reports. They took out the loans on the condition that the total amount in the account not fall below $1 million; if it fell below that, the stocks would have to be sold to pay on the loan.

Then the financial crisis happened in the fall of 2008, and by November of that year, the Mirabellis had lost $800,000, and had to sell their portfolio. Their attorneys allege that their money was placed in the wrong type of portfolio for their needs, without any sort of diversification in the stocks. Barry Lax, the Mirabellis’ lawyer, argued that this sort of portfolio for the retired ballplayer was “inappropriate,” given the risks, Reuters reports.

Athletes losing money through investments is a pretty common tale, but it’s often due to things like investing in a relative’s get-rich-quick scheme, or something they don’t know how to run, like a restaurant. But Mirabelli went to a financial expert who was considered to be one of the top advisors in the country – Barron’s had Scott listed as #30 on their nationwide list —  from a big-name company like Merrill Lynch.  Mirabelli did the “right” things here, and still lost $800,000 in just a matter of months.

He and his lawyer filed a case against Scott and Merrill Lynch, asking for $1,000,000 in compensatory damages, and all the legal fees and associated costs paid. FINRA agreed with Mirabelli’s case, and the three-member panel awarded him $800,000 and $439,000 in attorney’s fees and costs, something Lax, Mirabelli’s lawyer, told the Wall Street Journal was a “significant victory.” Lax told Reuters, “It’s rare for a FINRA arbitration panel to award every dollar amount of out-of-pocket loss.” He said that in 20 years of representing such cases, he has seen the original investment and the associated legal costs awarded in less than 5 percent of the time. “The panel basically put the Mirabelli’s back in a position that they would have been in had they never met Phil Scott,” he said.

Mirabelli, a member of the 2004 and 2007 Red Sox World Series-winning teams, was mainly known as his ability to catch the knuckleball – something that made him Tim Wakefield’s personal catcher, and that brought him back to the team after he was traded to the San Diego Padres in the winter of 2005 – his replacements couldn’t catch the knuckleball, so after only a month on the Padres, he was traded back to the Red Sox just before a Boston-New York game at Fenway Park. Mirabelli’s presence in that game was considered so important that he got a police escort from local police so he could make it to the ballpark in time in order to catch knuckleballer Wakefield again. Now Mirabelli can also be known for beating Merrill Lynch.

The retired catcher isn’t the only person to win an arbitration case against Scott – another client was also awarded $880,000 in compensatory damages last year.

Bill Halldin, a spokesman for Merrill Lynch, said the company disagreed with the ruling, saying that “this account was handled properly during a very difficult time when there was extreme market volatility.” It is unclear yet whether the company will appeal.

Lisa Swan is a Feature Writer for the Compliance Exchange and Wall Street Job Report. She is also a columnist for The Faster Times and a blogger for Subway Squawkers. Her work has also appeared in the New York Daily News, Yahoo Sports, Huffington Post and the books Graphical Player 2011 and Graphical Player 2010.