In Re Merrill Lynch Trust Company Fsb

Real party in interest, Chris Pereyra, recovered $2 million in settlement of a personal injury lawsuit. In 1994, she executed a Cash Management Account Agreement ("CMAA") with Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S") and deposited the proceeds of the settlement into a cash management account. The CMAA contains an arbitration clause. Relator, Henry Medina, a MLPF&S employee, served as Pereyra's financial advisor. Medina is also licensed to sell insurance. Medina advised Pereyra to establish a trust account with some of her funds, and name relator, Merrill Lynch Trust Company of Texas, as trustee. A Merrill Lynch Life Insurance Policy is the sole asset of the trust, which is governed by a Trust Agreement entered into between Pereyra and Merrill Lynch Trust Company of Texas. In September 2002, Pereyra filed a National Association of Securities Dealers, Inc. ("NASD") arbitration proceeding against MLPF&S and the three relators (Pereyra's "NASD claims"). At the same time, Pereyra filed a lawsuit against the three relators (Pereyra's "lawsuit claims").