Merrill Lynch will have to shell out nearly $3.7 million in damages and other costs after arbitrators sided against the wealth management firm following a private equity complaint.
Two customers, Qun He and Haihui Zhang, filed a complaint against Merrill, Bank of America’s wealth management division, in late 2023, alleging the firm violated securities laws, industry standards and its fiduciary duty.
The complainants also alleged the firm acted with negligence and negligent supervision and breached its contract related to various unspecified securities. Merrill Lynch denied the allegations.
The U.S. Financial Industry Regulatory Authority (FINRA) made an independent arbitration forum available, and a public panel of arbitrators decided Merrill Lynch should pay the claimants $2.73 million in compensatory damages, $2,002 in costs and $954,634 in attorneys’ fees.
Michael Bixby, a Florida attorney who represented the two customers, tells AdvisorHub that a broker recommended investments in illiquid proprietary feeder funds sold by Merrill. Bixby says that the feeder funds pooled capital into private equity investments overseen by institutional investors such as Apollo Global Management, KKR and Blackstone.
The lawyer says the recommended funds were advertised as having potential annual returns of 15% to 20%, but ended up recording annual returns around 3% after subtracting private equity fees and administrative charges from Merrill.
“We’re pleased with the result, and we think it reflects the arbitrator’s decision that Merrill was responsible for misconduct and held them accountable.”
Follow us on X, Facebook and Telegram
Don’t Miss a Beat – Subscribe to get email alerts delivered directly to your inbox
Check Price Action
Surf The Daily Hodl Mix
 
Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.
Generated Image: Midjourney
Credit: Source link
