Keith Schooley's new book, Merrill Lynch: The Cost Could Be Fatal, offers a rare inside account of a dispute between a former broker and one of the world's largest financial firms. Schooley joined Merrill Lynch in July 1991 as a financial consultant trainee in a small Oklahoma branch office. He scored 93.2 percent on the Series 7 exam and ranked among the top ten rookie producers in his division. Fourteen months later, he was out of the securities industry for good. His book, based on memos, letters, regulatory correspondence, recorded telephone conversations, and the transcript of his arbitration hearing, details what happened in between and the nine-year fight that followed.
The title comes from the firm's own general counsel, who warned in a 1992 employee publication that letting integrity take second place to revenue would cost the firm more than dollars: "The cost could be fatal." Schooley, who says he joined Merrill Lynch in part because of its reputation for ethics, took that language literally. Citing the firm's written requirement that employees report improprieties to whatever level of management is necessary, he wrote a four-page memo to his branch manager, then a 31-page letter to all thirteen members of the board of directors. What followed, as Schooley tells it, was two internal investigations, inquiries by the SEC, the NYSE, the NASD, and two state insurance departments, his own termination, a forced move into binding securities arbitration, a four-day hearing, and more than a decade of appeals.
The arbitration panel awarded him nothing. Schooley does not hide that result. The book opens with a foreword by his former attorney, Stephen Jones, who states plainly that Schooley lost, and who argues the real subject is not one man's case but whether investors should have claims decided by arbitrators rather than juries. Jones tells readers that each of them becomes "one of the jurors he never had." This argument strikes at the heart of a system that affects millions of investors. Mandatory arbitration clauses are standard in brokerage agreements, requiring customers and employees to resolve disputes in private forums that critics say favor the industry. By sharing his story, Schooley hopes to spark public debate about the fairness of that system.
The book also documents what the fight cost him personally: a bankruptcy, a divorce, and a securities-industry record that he says made him unemployable at every firm he approached. Schooley grew up in Oklahoma City, earned a B.B.A. from the University of Oklahoma and an M.B.A. from Oklahoma State University, and worked in oil and gas before turning to Wall Street. He lives in Enid, Oklahoma. Merrill Lynch: The Cost Could Be Fatal presents one former employee's account of his dispute with his employer. The allegations described in the book are the author's. The arbitration panel ruled in the firm's favor, and no regulator brought a formal enforcement action. The book is available now.
