A Florida federal court rejected Merrill Lynch's petition to vacate an arbitration decision on Monday, clearing the way for two financial advisors to receive a $10.25 million awarded to them in April.

"Upon a careful review of the record and the evidence presented by the parties, the Court finds no bases to overturn the arbitration panel's ruling and will therefore deny Merrill Lynch's petition and grant respondent's cross petition," the court said in its order denying the petition to vacate the arbitration award on Monday.

Merrill Lynch tried to appeal the award to two financial advisors formerly employed with the firm, Meri Ramazio and Tamara Smolchek, claiming that the chairwoman of the arbitration panel failed to disclose certain facts and her bias in the case. The arbitration panel also limited what the firm could present in hearings and imposed sanctions against the firm, Merrill Lynch claimed. Those sanctions went beyond the FINRA arbitration panel's powers, the firm said.

The husband of FINRA panel chairwoman Bonnie Pearce is part of a law practice that won an award against Merrill Lynch in 2005. Pearce's husband subsequently said in an interview with a newspaper that he was "particularly satisfied at having obtained an award against Merrill Lynch," according to the court documents.

Ramazio and Smolchek opposed the petition to vacate the award. In their response, they maintained that Merrill Lynch could not prove that Pearce knew the facts involving her husband. At the same time Merrill Lynch knew of the possible conflict of interest before the close of the hearing and did not raise any objections, the defense lawyer for the advisors argued. The arbitration panel did not act in any way beyond its powers, the advisors' lawyer said.  

The federal court's decision sided with Ramazio and Smolchek on Monday, citing the fact that Merrill Lynch's counsel had printed eight pages from Pearce's husband's website, dated prior to the arbitration hearing that began on Jan. 23, 2012. The firm also had an undated copy of the arbitration case in that same file.

"A party that discovers the possibility of bias cannot ignore it, proceed as if it has no concerns regarding bias, and then after receiving a detrimental ruling, announce what it had known before the proceeding began," the court's order states.

The lawyer for Ramazio and Smolchek, Michael Taaffe, a partner at Shumaker, Loop & Kendrick LLP, was not immediately available for comment.

"We're reviewing the decision," Bank of America Merrill Lynch spokesman Bill Halldin said Monday.

Ramazio and Smolchek were formerly employed at Merrill Lynch in Delray Beach, Fla., and subsequently filed their initial arbitration claim against the firm in October 2010. Smolchek worked at the firm for 18 years, according to his public registration records with the independent regulator, while Ramazio was with the firm for more than four years. Their claim addressed the termination of their employment after Merrill Lynch was acquired by Bank of America, as well as the handling of their deferred compensation plans.

The $10.2 million award decision by the FINRA panel in April included compensatory damages in the amount of $4.28 million to Smolchek and $875,000 to Ramazio for breach of contract related to their deferred compensation awards, breach of duty of good faith and fair dealing, breach of fiduciary duty, unjust enrichment, unjust competition, tortuous interference with advantageous business relations, defamation, fraud and negligence.

The FINRA arbitration panel also awarded punitive damages in the amount of $3.5 million to Smolchek and $1.5 million to Ramazio for Merrill Lynch management's "'intentional misconduct' and at the very least, 'gross negligence' in connection with the administration of the Deferred Compensation plans," the arbitration decision states.

Merrill Lynch has a proposed $40 million settlement with certain financial advisors it formerly employed regarding those same deferred compensation plans. The settlement is awaiting approval from a federal court judge in Manhattan.