March 20, 2006 – Portland, Maine – A jury in Cumberland County Superior Court today found Bank of America guilty of professional negligence and mismanaging Darrell Mayeux’s $27 million dollar nest egg. Mayeux, a retired Fairchild Semiconductor executive and resident of Falmouth, Maine, hired Fleet Bank’s Private Client Division (since acquired by Bank of America) in 2000 after Fairchild’s IPO made him wealthy. The jury found that the bank’s failure to provide the financial advice and investment protection it promised at the time of Mayeux’s retirement caused the loss of his fortune. A unanimous verdict of nine jurors awarded the couple $7,448,026.00.
According to Mayeux’s attorney, Jon Piper of Preti Flaherty, this is believed to be the first verdict of this nature against a private clients group of a bank in Maine, and certainly the largest award. “We couldn’t be happier for these two wonderful people who have been through hell and back.”
According to Piper, Fleet’s Private Clients Division courted Mayeux and promised him a banking relationship where his investments would be protected. Fleet convinced him to take out a $4 million line of credit, using Mayeux’s Fairchild stock as collateral against the loan, in order to make other investments to diversify his holdings. The loan required that Mayeux’s Fairchild stock remain valued at $8 million. Because Mayeux was still employed by Fairchild, he was restricted from collaring the stock. This banking relationship cost Mayeux $45,000 a year for the Private Clients Division services plus $144,000 a year in interest on the line of credit.
When Mayeux retired from Fairchild in November 2001, he received no contact from Fleet’s Private Clients Division regarding new investment strategies for his retirement. Because Mayeux was no longer employed by Fairchild, he was free to collar his stocks and could have paid off the $4 million dollar line of credit. Mayeux was given no financial planning advice and months later, when Fairchild’s stock fell, his line of credit went out of balance. Fleet ultimately sold all of the shares at historic lows to pay off the loan, leaving Mayeux with a negative net worth.
About Preti
Preti Flaherty has offices in Portland, Bath and Augusta, Maine, Concord, N.H. and Boston, Mass. With more than 80 attorneys, the firm counsels clients in the areas of business law, energy, environmental, estate planning, franchise, health care, intellectual property, labor and employment, legislative and regulatory, litigation, technology and telecommunications.
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