A retired business executive’s lawsuit accusing bank officials of giving him bad financial advice that cost him millions of dollars went to trial in Portland, Maine this week.
Darrell Mayeux, who filed the suit in 2003 against Fleet Bank, which was later acquired by Bank of America, said the bank mismanaged his investments and failed to provide the kind of personal attention it had promised. The bank denies the charges.
Mayeux, a former vice president of sales and marketing at Fairchild Semiconductor, said he was approached in 2000 by the bank’s Private Client Group, which represents people with at least $1 million in assets. At the time, Mayeux had Fairchild stock worth about $16 million.
The suit alleges financial planning malpractice, said Jonathan Piper, Mayeux’s attorney. He said a University of Maine finance professor who has been retained as a witness has estimated that Mayeux’s damages amount to about $8.5 million.
“It’s a guy who walked into the bank with (millions) and walked out with nothing because he got bad advice,” Piper said.
Bank officials maintain that Mayeux’s problems were of his own doing.
“Bank of America takes its advising role with clients very seriously,” said spokeswoman Shirley Norton. “The bank has reviewed the matter carefully and is confident it acted appropriately in all respects in dealings with Mr. Mayeux.”
Mayeux deposited 463,000 shares of Fairchild stock in a Fleet investment account in August of 2000, and was persuaded to take out a $4 million credit line using the stocks as collateral, his suit states.
The suit says Fleet advised Mayeux to use the loan to create a diversified investment portfolio. A year later, in August 2001, Mayeux retired after 32 years in the semiconductor industry.
In 2002, with Fairchild’s stock price plummeting from more than $30 to about $10 a share, the value of Mayeux’s collateral plummeted. But the suit claims Fleet failed to provide financial advice when the falling value put his loan into jeopardy.
When the value of the stocks fell to $4.2 million, the bank advised him to sell 263,000 shares, which he did. Under the terms of the loan, the value of his collateral — his stock shares — wasn’t supposed to drop below $8 million.
The following spring, Fleet sold the remaining 200,000 shares to recoup the money owed it by Mayeux, raising $2.2 million.
The suit states that Fleet panicked when it sold the stock for between $10.33 and $11.83 a share, in the middle of the war in Iraq.
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