Merrill Lynch should shell out almost $3.7 million in damages and different prices after arbitrators sided in opposition to the wealth administration agency following a personal fairness grievance.
Two clients, Qun He and Haihui Zhang, filed a grievance in opposition to Merrill, Financial institution of America’s wealth administration division, in late 2023, alleging the agency violated securities legal guidelines, business requirements and its fiduciary responsibility.
The complainants additionally alleged the agency acted with negligence and negligent supervision and breached its contract associated to varied unspecified securities. Merrill Lynch denied the allegations.
The U.S. Monetary Business Regulatory Authority (FINRA) made an impartial arbitration discussion board accessible, and a public panel of arbitrators decided Merrill Lynch ought to pay the claimants $2.73 million in compensatory damages, $2,002 in prices and $954,634 in attorneys’ charges.
Michael Bixby, a Florida lawyer who represented the 2 clients, tells AdvisorHub {that a} dealer really useful investments in illiquid proprietary feeder funds offered by Merrill. Bixby says that the feeder funds pooled capital into non-public fairness investments overseen by institutional buyers akin to Apollo International Administration, KKR and Blackstone.
The lawyer says the really useful funds had been marketed as having potential annual returns of 15% to twenty%, however ended up recording annual returns round 3% after subtracting non-public fairness charges and administrative expenses from Merrill.
“We’re happy with the end result, and we predict it displays the arbitrator’s resolution that Merrill was liable for misconduct and held them accountable.”
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