A June 21st announcement by the Financial Industry Regulatory Authority (FINRA) stated that the regulator has fined Merrill Lynch, Pierce, Fenner & Smith Inc. The firm was fined $2.8 million for supervisory failures and failing to provide required trade notices, and ordered to pay $32 million in remediation to affected customers, plus interest. The supervisory failures allegedly resulted in overcharging customers in the form of unwarranted fees amounting to $32 million. Securities arbitration lawyers continue to file claims on behalf of investors who have been overcharged by the firms with which they invest.
According to FINRA’s findings, Merrill Lynch failed to provide an adequate supervisory system from April 2003 to December 2011. This lack of adequate supervision allegedly resulted in customer billing that was not in accordance with contract and disclosure documents. This inaccurate billing affected almost 95,000 customer accounts. The unwarranted fees, plus interest, have since been returned to the affected customers by Merrill Lynch. Securities fraud attorneys say that when firms do not provide adequate supervisory systems, they can be held responsible for investor losses. This applies to both overcharges and instances where the firm does not supervise its brokers, some of whom then commit fraud.
In addition, Merrill Lynch did not provide customers with timely trade confirmations, as a result of computer programming errors, in certain advisory programs. Because of these errors, over 10.6 million trades in more than 230,000 customer accounts did not receive trade confirmations. Furthermore, Merrill Lynch did not properly identify its role on account statements and trade confirmations in certain transactions, specifically whether it acted as principal or agent. Securities arbitration lawyers, and FINRA’s decision, support the idea that computer programming errors are never an excuse for improper conduct on the part of a securities firm.
FINRA’s Executive Vice President and Chief of Enforcement, Brad Bennett, stated that, “Investors must be able to trust that the fees charged by their securities firm are, in fact, correct. When this is not the case, investor confidence is threatened.”
If you have questions or concerns about your investment with Merrill Lynch, and believe you may have been the victim of securities fraud, find out more about your legal rights and options, by contacting a securities fraud attorney at The Law Office of Christopher J. Gray at (866) 966-9598 for a no-cost, confidential consultation.