“Helen Evers had nearly $1 million in savings when she met broker Tania Torruella in 1999. The disabled Ms. Evers, 56 years old, said she wanted a healthy income from conservative investments to support her and her invalid mother,” writes Randall Smith in today’s Wall Street Journal.

“The former career counselor, who lives in Costa Mesa, Calif., said the broker derided the paltry returns she had been receiving from her annuities and municipal-bond funds, showing her papers indicating she had delivered annual returns of 50% to 70% for clients in the past. Ms. Evers added in an interview: ‘She said, “If you let me take this over, you’re already rich and I’m going to make you richer.” ‘ “

“Try poorer. After Ms. Torruella liquidated her conservative nest egg and plowed the proceeds into technology-company stocks that later plunged, Ms. Evers’s account sank to just $150,000. Ms. Evers — who has accused Ms. Torruella of unauthorized trading, among other things, in a legal claim — said she was forced to sell her 1997 Toyota RAV 4L to make ends meet.”

“Ms. Evers is one of 139 customers who have filed complaints against Merrill Lynch & Co., which hired the star broker in 1999 from the Dean Witter unit of Morgan Stanley after paying her a signing bonus of nearly $1 million. Merrill, which fired Ms. Torruella last summer, already has paid out $18.7 million to about 90 of them, and a group of 34 other clients (including Ms. Evers) is seeking an additional $50 million in damages, according to Mark F. Raymond, a Miami lawyer representing the investors.”

“Ms. Torruella, 42 years old, used different methods to network. An avid tennis player, the broker recruited many of her clients on the tennis court. But among the investors who suffered losses under her watch also were 17 relatives — including her mother, father, stepmother, three brothers, a sister, two nephews, six cousins and two in-laws, according to Ms. Torruella’s lawyers. At least seven of the relatives have received settlement payments from Merrill totaling $661,000, according to records kept by the National Association of Securities Dealers.”

“Michael Hanzman, a lawyer for Ms. Torruella, said she wasn’t available to comment on the matter, and hasn’t found a new job. But he blamed the situation on ‘supervision and compliance problems’ at Merrill.”

“The Torruella imbroglio is symptomatic of what happens when the entire stock market turns downward after years of bull-market gains, as it did in early 2000. Questionable practices that may be ignored or overlooked in a rising market become glaring problems when customers start complaining about losses.”

“More broadly, Ms. Torruella’s story — and that of Frank Gruttadauria, the Lehman Brothers broker accused of bilking clients out of nearly $300 million — shine a light on a long-running secret in the world of Wall Street: Top-producing brokers often receive lax supervision from their securities-firm managers. This is partly because the firms don’t want to ruffle the feathers of such producers, who typically control huge sums of client assets that can leave the firm if the broker bolts. For investors, this means they need to be particularly alert to problems if their stockbrokers are stars.”