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South Florida developer Don Peebles has been litigating to recover more than $1 million that he lost in the stock market when the dot-com bubble burst five years ago. But he just keeps losing. Earlier this month, the 11th U.S. Circuit Court of Appeals in Atlanta rejected his attempt to erase an arbitration decision that awarded him nothing on his claim against New York City-based Merrill Lynch over technology stock purchases in 1998 and 1999. He had sought to win a court order for a new arbitration. Peebles is best known as the developer of Miami Beach’s Royal Palm Hotel and the Residences at the Bath Club. “It’s just as bad to steal the wallet of a rich man as a poor man, and that’s what occurred here,” said Peebles’ attorney, Steven Reininger of Rasco Reininger Perez & Esquenazi in Coral Gables, Fla. “We are pleased that the 11th Circuit has upheld the lower court’s ruling refusing to vacate the arbitration award that awarded Mr. Pebbles nothing for his meritless claims,” Merrill Lynch spokesman Mark Herr said. “It is also our hope that this will end these protracted and needlessly litigious proceedings.” Merrill Lynch was represented by Neil Baritz of Baritz & Colman in Boca Raton. According to the 11th Circuit’s Dec. 12 decision, Peebles had expressed openness to moderate investment risk when he opened the Merrill Lynch account with broker Lance Slaughter in Washington, D.C., in 1997. Slaughter, who is no longer with Merrill Lynch, recommended blue chip stocks, but Peebles rejected them in search of higher yields. The developer told Slaughter to suggest some real estate investment trusts and asked about technology stocks. Slaughter said that “Merrill Lynch’s top analysts highly recommended” technology stocks, and Peebles invested in 24/7 Media and [email protected], among other stocks, the court said. New York Attorney General Eliot Spitzer claimed in a 2002 lawsuit that Merrill Lynch analysts offered inflated ratings on stocks — including those recommended to Peebles — for added pay, while disparaging those stocks in internal e-mails. The investment house settled that case for $100 million and agreed to overhaul its policies. In 2001, Peebles filed an arbitration claim against Merrill Lynch with the National Association of Securities Dealers alleging fraud, misrepresentation, breach of fiduciary duty, unfair practices, failure to supervise, breach of contract and unauthorized trading. But in 2003, an NASD panel in New York City dismissed all of Peebles’ claims. Months later, he sued in Miami-Dade Circuit Court to vacate the arbitration ruling, and he asked for up to $2 million in compensatory damages. Merrill Lynch succeeded in removing the case to U.S. District Court in Miami on the grounds that the underlying $2 million claim met the standard for federal jurisdiction. The 11th Circuit had never decided the question of whether someone should be allowed to pursue a new arbitration claim, intending to seek an award above “the amount in controversy for diversity jurisdiction purposes.” The minimum financial claim accepted in federal court is $75,000. Peebles contended his case qualified for state court review because he was challenging the zero dollar award. U.S. District Judge Cecilia Altonaga’s decided last year to keep the case in federal court, and she refused to vacate the NASD arbitration decision. Peebles challenged that, insisting in an interlocutory appeal that his claim should go back to state court because he was primarily seeking an order for a new arbitration hearing. The 11th Circuit panel decided that pairing the request for new arbitration with the $2 million claim put Peebles under federal jurisdiction. It also affirmed Altonaga’s decision against vacating the NASD arbitration decision, concluding Peebles did not meet the narrow grounds for it. The appellate decision was written by Mark Fuller, Chief Judge of the Middle District of Alabama. 11th Circuit Judges Gerald Tjoflat and Rosemary Barkett concurred. Reininger said Peebles has not decided whether to pursue a U.S. Supreme Court appeal. He said the high court is considering whether to hear a similar securities case, and there is a split in the circuits on the issue. Peebles did not return a call for comment. Reininger said his client was “disappointed.” “Arbitration is a hot button,” Reininger said. “The courts nowadays like to leave arbitration awards alone.”

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