David Maura was recently dismissed from Merrill Lynch, where he was a high-yield consumer products analyst, because of similarities between a recent research report he published and reports written by his predecessor, George Chalhoub. He has hired counsel and is attempting to resolve the situation with Merrill. Maura, hired in July, was under contract to receive nearly seven figures this January, according to one person with knowledge of the situation. Maura declined to comment on the amount he was to receive. Allan Dinkoff, Merrill's general counsel, referred calls to Mark Herr, a spokesman. "We're going to decline to comment on the substance of this matter, but we're taking a hard look at the situation and will take the appropriate course based on the hard look we're taking," Herr said.
Maura says that on Nov.14 he was brought into an office with Tom Sowanick, Merrill's director of global fixed-income research, Marc Pinto, the firm's head of credit research for the Americas, and a human resources executive. "They threw two reports in front of me. I said 'Yeah, they look similar.'" Maura says he was then told by one of the three that he was being released from the firm without compensation or benefits due to an "integrity issue." Sowanick did not return calls to his office or his mobile phone. Pinto did not return a call to his office. Chalhoub left Merrill to join Deutsche Bank in May (BW, 5/26).
The reports shown to Maura at the meeting were on American Greetings. One was published by Maura on Nov. 6; the other was written by Chalhoub and dated Sept. 30, while he was at Deutsche Bank. Maura says his Nov. 6 report actually bore similarities to three reports published by Chalhoub--two while he was at Deutsche Bank dated Sept. 30 and July 12, and one written while he was still at Merrill from April 3. "All those [Chalhoub] reports are--like--identical," he says. Maura acknowledges using part of an earlier report by Chalhoub. "I used an old April piece as a template. Some of the lead-in language was verbatim." However, he says it was his understanding that the report was the property of Merrill Lynch. Further, he says the thesis of the report was quite different. Maura rated American Greetings as "neutral," while Chalhoub had rated it "overweight."
Maura has retained Craig Albert, a counsel at Reitler Brown LLC to contest the termination. Albert declined to provide BW with copies of the reports in question, citing the fact that they are not his property. However, he says the parts that Maura copied were "boilerplate" and gave the following example: "The company implemented its restructuring initiatives: 1) within the targeted time frame 2) with better than expected normalized results 3) with lower than expected debt levels and 4) with significantly better than expected liquidity." This sentence, he says, was in both the April and November Merrill reports and, with three words changed, in the Sept. 30 and July 12 Deutsche Bank reports. Chalhoub declined all comment on the matter.
Albert says the matter may be settled amicably, or through arbitration or litigation if necessary. He says Maura "enjoyed his time at Merrill and does not bear them any ill will. He is entitled to the compensation he earned."