A Portland, Maine jury this week awarded $7.4 million in damages to a former Fairchild Semiconductor executive who blamed the former Fleet Bank’s Private Client Group for causing the loss of his fortune once valued at $27 million in stock and cash.
Darrell Mayeux, who made his nest egg when Fairchild went public in 1999 while he served as vice president of sales and marketing, contended Fleet Bank failed to properly advise him on his assets, particularly after he retired in 2001.
Bank of America, which acquired Fleet, said Mayeux repeatedly ignored advice.
Jurors in Cumberland County Superior Court deliberated more than 11 hours over two days before rendering their verdict Monday afternoon.
Jonathan Piper, Mayeux’s lawyer, said the bank’s biggest failing was in not revisiting Mayeux’s financial arrangement after he retired.
Eventually, his $4 million line of credit went out of sync when the stock’s value dropped, and Fleet responded by selling off stock, causing a downward spiral that eliminated the entire value of Mayeux’s portfolio within a year, Piper said.
Bank of America denied any wrongdoing and said it was considering an appeal.
”We’re disappointed with the verdict and continue to maintain, as we have all along, that we acted appropriately in our dealings with Mr. Mayeux,” said Shirley Norton, a spokeswoman in the bank’s San Francisco office.
Testimony during the trial painted a picture of Fleet Bank’s Private Client Group actively courting Mayeux and his fortune with multiple presentations and an invitation to join its president in a golf tournament.
”They made a lot of promises that they couldn’t keep,” said Tim Bryant, who served as Piper’s co-counsel during the trial.
The case demonstrated in dramatic fashion just how fast money can be won and lost. Mayeux received 667,000 shares of the company’s stock when the company went public, and it was worth $12.1 million on the first day of trading.
The value later topped $27 million.
The bank recommended a mechanism for protecting Mayeux from fluctuations in the stock’s value, but he turned it down initially because he still worked for Fairchild and felt that the strategy would have sent the wrong message to investors, Piper said. A year later, Mayeux retired but Fleet never changed its strategy, he said.
Piper, whose clients have included media organizations including The Associated Press, said banks lobbied for regulatory changes that allowed them to become financial advisers. With that change came responsibilities to follow through, Piper said.
”You have to be careful what you wish for,” he said.
The lawsuit never would have materialized if Fleet hadn’t pressed for an additional $182,000 it claimed it was owed by Mayeux, Piper said. When Fleet pressed the issue, Mayeux decided to proceed with the lawsuit, he said.
After the verdict, Mayeux declined to badmouth the bank’s employees, saying they were good people who followed bad procedures. ”I won’t say anything bad about the people of the bank,” said Mayeux, his wife P.K. by his side.
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