Merrill Lynch, Pierce, Fenner & Smith Inc. (“Merrill Lynch”) (CRD# 7691) has many different complaints filed by FINRA (Financial Industry Regulatory Authority), state regulatory organizations, and investors such as yourself. At the Law Offices of Robert Wayne Pearce, we have investigated Merrill Lynch, its regulatory and customer complaints, and have also represented investors with claims of fraud, negligence, and breach of fiduciary duty against this organization and its financial advisors.
If you believe you have a claim against Merrill Lynch, you should strongly consider hiring an investment fraud lawyer. You should not wait until it’s too late to file a claim. The Law Offices of Robert Wayne Pearce, P.A., offers free consultations. Give us a call at 800-732-2889. Let’s discuss your case and see what we can do to help you get the compensation you need and deserve.
Can I Sue Merrill Lynch?
If you’ve lost money caused by Merrill Lynch and/or its employees’ misconduct then the answer is, YES, you can sue Merrill Lynch but the odds are you signed away your right to sue in court and agreed to resolve your dispute in a FINRA arbitration proceeding. Attorney Robert Wayne Pearce has over 45 years of personal experience in FINRA arbitration proceedings and knows very well how you can not only sue Merrill Lynch in FINRA arbitration proceedings, but WIN that arbitration. The easiest way to know if you have a viable case against Merrill Lynch is to call Attorney Pearce at our office at 800-732-2889.
Investment Losses? We Can Help
Discuss your legal options with an attorney at The Law Offices of Robert Wayne Pearce, P.A.
or, give us a ring at (800) 732-2889.
What is Merrill Lynch?
Merrill Lynch (CRD# 7691) is a registered broker-dealer. It operates as a full-service independent broker-dealer, providing a range of financial products and services to individual investors and financial advisors.
As a registered broker-dealer, Merrill Lynch is subject to regulations and oversight by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). It is required to comply with industry standards and regulations to ensure the protection of its clients’ interests.
A failure to comply with industry standards by either its brokers or the firm itself can result in disciplinary actions, fines, or other penalties imposed by regulatory authorities.
Merrill Lynch Has Many Different Regulatory Problems
Merrill Lynch’ rapid growth has not been without consequences. There have been approximately 593 state and self-regulatory body disclosure events; that is, final and formal proceedings initiated by a regulatory authority (e.g., a state or federal securities agency like the U.S. Securities and Exchange Commission (SEC) or self-regulatory body like the Financial Industry Regulatory Authority (FINRA) for a violation(s) of investment-related rules or regulations. In addition, there have been hundreds of customer complaints filed against Merrill Lynch for misconduct by its securities sales and investment advisory representatives that are not reported by the firm on its Central Depository Record.
We have reported and written about these regulatory problems and customer complaints over many years. Merrill Lynch is a repeat offender: there are over 593 FINRA-reported disciplinary proceedings citing the firm with one form of supervisory lapses or another.
A Brief Overview of Some of the Regulatory Problems Merrill Lynch Has Faced Over the Years*
Merrill Lynch has been repeatedly censured, warned, and fined multi-millions of dollars for its own misconduct and failure to supervise its army of financial advisors.* A few of the notable FINRA Sanctions for its Supervisory Failures are below:
Merrill Lynch Fined $1.4 Million Over Do-Not-Call Violations
Brief Overview: In May 2023, Merrill Lynch signed consent orders to pay fines resulting from telemarketing violations, as reported by AdvisorHub. The Financial Industry Regulatory Authority (FINRA) and state regulators in New Hampshire reached settlements with Merrill Lynch, requiring the company to pay fines totaling $1.4 million and accept a censure.
The cases revolve around allegations that from 2018 to 2020, Merrill Lynch trainees made thousands of cold calls to phone numbers listed on the national do-not-call registry and the firm’s internal do-not-call list. Despite having a policy against calling numbers on these lists, Merrill Lynch was found to lack an adequate supervisory system to prevent such calls. During compliance reviews, officials did not consider numbers that trainees called but didn’t log as prospective clients within its content management system. A former employee raised the issue in 2019.
Merrill Lynch was found in violation of several FINRA rules, including Rule 3230 prohibiting brokers from calling individuals who previously expressed their refusal to receive outbound telephone calls and Rule 3100, which requires broker-dealers to maintain a supervisory system for compliance. Merrill Lynch also violated Rule 2010, which mandates firms to uphold high standards of commercial honor. Under the settlement, Merrill Lynch agreed to pay $700,000 in fines to FINRA without admitting or denying the findings. In the New Hampshire case, the firm will pay a fine of $650,000, along with $50,000 for the investigation costs. Merrill Lynch stated that it conducted an internal review, reported its findings to FINRA, and improved its supervision and training upon being notified of the trainees’ issues.
Merrill Lynch to Paid $15.2 Million to Overcharged Mutual Fund Customers
Brief Overview: On June 2, 2022, Bank of America Corp’s Merrill Lynch unit agreed to pay over $15.2 million to thousands of customers who were automatically directed to buy costlier mutual fund shares than they were eligible for, as reported by Reuters. The Financial Industry Regulatory Authority (FINRA) announced the settlement, which includes restitution and interest, and does not impose any fines. Merrill Lynch did not admit or deny wrongdoing in accepting the payout.
FINRA revealed that Merrill Lynch had a flawed automated system, which was intended to limit customers’ purchases of more expensive Class C mutual fund shares when cheaper Class A shares were available. However, the system frequently failed to restrict Class C share purchases, resulting in customers paying $13.4 million in unnecessary fees and expenses between January 2015 and January 2021.
As part of the settlement, Merrill Lynch agreed to convert customers’ Class C shares to Class A shares where appropriate. The absence of a fine was attributed to Merrill’s “extraordinary cooperation,” which included hiring an external consultant to identify affected customers and implementing a remediation plan. Bank of America stated that it proactively detected the issue, reported it to FINRA, and took steps to address it.
Merrill Lynch to Pay $415 Million for Misusing Customer Cash and Putting Securities at Risk
Brief Overview: On June 2016, Merrill Lynch agreed to pay $415 million and admit wrongdoing to settle SEC charges. The firm misused customer cash by engaging in complex options trades, freeing up billions of dollars for its own trading activities. Had Merrill Lynch failed during these trades, customers would have faced a significant shortfall in the reserve account. Additionally, the firm violated the Customer Protection Rule by holding customer securities subject to liens, exposing customers to risk. Merrill Lynch also impeded whistleblowers in severance agreements. The settlement requires Merrill Lynch to pay $415 million and implement remediation measures.
*Above are only some of the regulatory disciplinary actions filed against Merrill Lynch by FINRA. NASSA and other state securities regulator investigations and enforcement actions account for another 593 BrokerCheck disclosures.
Why Does Merrill Lynch Have So Many Regulatory Problems And Customer Complaints?
Independent broker-dealers are notorious for their lax supervisory practices and procedures. The business model of these franchise type operations is to open many offices nationwide for steady growth of fixed monthly revenues without the costs attendant to a full-service branch office with on-site manager, compliance officer and operation personnel. The registered representatives of these independent broker-dealers generally operate as separately incorporated businesses. They are not employees of the broker-dealer and therefore not controlled in the same manner as full-service brokerage firm representatives. The registered representatives control their structure and costs to maximize profits and often leave the protection of investors’ rights and interests as their lowest priority.
The typical supervisory organization of independent broker-dealer operations is to have other independent contractors operate Offices of Supervisory Jurisdiction (OSJs) to monitor the registered representatives from geographically remote offices and then report to the main franchisor’s compliance office at national headquarters. The supervisors at the OSJs are not employees of the franchisor and often run their own brokerage, insurance and other businesses. They are not devoted full-time supervisors of the smaller branch offices. Consequently, OSJ managers cannot and do not supervise the day-to-day operations of the registered representatives of these Independent broker-dealers.
Generally, there is no immediate review of new accounts opened, securities transactions, business records, cash or securities receipts and deliveries, correspondence and business activities unrelated to the securities brokerage operation at these independent brokerage firms. The lax supervision leaves investors who have transferred their accounts to the smaller independent broker-dealer vulnerable to sales of securities that have not been reviewed or authorized by anyone other than the sales representative earning a commission. There may be no one onsite to detect forgeries of clients’ signatures on documents, the placement of inaccurate information about a client’s investment objectives and financial condition to document the suitability of a particular investment recommendation. Oftentimes there is no daily review of sales literature and client correspondence to protect against misrepresentations and misleading statements being made to investors. In fact, it is not unusual for there to be only one compliance audit visit per year at many of these offices.
These Independent brokerage business operations are worrisome to the North American Securities Administrators Association (NASAA), which has documented more instances of sales abuse and consequently investor losses at these firms than the traditional brokerage firms with branch offices with on-site managers and compliance personnel.
Did Merrill Lynch Advisor Misconduct Cause You Investment Losses?
When financial advisor misconduct has caused you to lose substantial value to your investment accounts, you have the right to seek reimbursement from the responsible parties. Merrill Lynch is responsible like any employer for its financial advisors acts and omissions. In addition, it has an independent duty to supervise its stockbrokers and investment advisors. These cases can be extremely complex, and so having the support of a reputable attorney who is experienced in recovering investment losses for investors is key to your success. Many customers make the mistake of contacting Merrill Lynch without representation with an attorney about their complaints and have their complaints denied.
Related Read: Can You Sue Your Brokerage Firm?
Investment Losses? We Can Help
Discuss your legal options with an attorney at The Law Offices of Robert Wayne Pearce, P.A.
or, give us a ring at (800) 732-2889.
Consult With An Attorney Who Recovers Investment Losses Caused By Merrill Lynch Today!
The investment loss attorneys at The Law Offices of Robert Wayne Pearce, P.A., have helped countless investors over the last 45 years recover the losses from their investment accounts that were caused by broker negligence or misconduct. The firm has extensive experience with Merrill Lynch cases, and Attorney Pearce is committed to seeing that those responsible for the losses you have suffered are held fully accountable.
Give us a call at 800-732-2889. Let’s discuss your case and see what we can do to help you get the compensation you need and deserve.
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