Let’s dive into a juicy story about how Merrill Lynch got slapped with a massive $15.2 million fine by the Financial Industry Regulatory Authority (FINRA). You can catch all the gritty details right here. They got this whopping bill—$13.4 million of it, plus some change in interest—because they were caught red-handed overcharging folks for mutual fund transactions. But here’s the kicker: they didn’t face any more heat beyond the fine. Why? Because they played ball really well with the investigation. If you’re keen on avoiding such pitfalls or just love a good financial drama, this one’s for you. Stick around, and I’ll spill all the secrets on how not to get caught in a similar bind.
In the world of mutual funds, you have different classes, such as Class A and C shares. The former usually includes an upfront sales fee, while the latter does not. Instead, Class C shares come with higher annual expenses and, typically, a charge if you sell them after a certain period.
Here’s a money-saving tip: many mutual fund issuers offer breaks on fees if you buy a large number of Class A shares. They can even waive the sales charge entirely if you hit certain thresholds. Ideally, this means you pay less upfront.
Merrill Lynch’s automated system was supposed to prevent folks from buying Class C shares when Class A shares were available at a cheaper price or even without any sales charges. Nonetheless, FINRA found that the system set a limit on Class C share purchases that didn’t align with what was actually available, misleading clients into making pricier Class C purchases when Class A would have been more favorable.
The result of this system error? From January 2015 to January 2021, Merrill Lynch customers forked over an additional $13.4 million in unnecessary fees and expenses. That’s money that could’ve been invested and grown instead.
After the situation came to light, Merrill conducted a thorough internal investigation and took commendable steps to fix the problem. This included hiring an independent expert to locate the affected customers and swiftly devising a plan to reimburse them.
Merrill Lynch is quite the financial giant, offering a full suite of services like sales, trading, and research through its massive network of roughly 31,000 agents. Since January 2009, it’s been part of the Bank of America Corporation family.
How to File a Financial Advisor Complaint
If you’ve had a rough experience with a financial advisor and you’re thinking about pulling the complaint trigger, let me offer you a roadmap to make sure your voice is heard loud and clear.
Start with FINRA – they’re the referees in the financial industry, independent from the government, but deeply involved in upholding the rules. Got a case that holds water? Tap on FINRA’s shoulder, or get in touch with your state’s securities regulator for advice.
An attorney with the right chops in financial disputes can be your guide through the entire process, from drafting the complaint to navigating the maze of arbitration. Think of them as your legal compass.
If things escalate or need more muscle, the Securities and Exchange Commission (SEC) can step in. As the sector’s watchdog, the SEC can sink its teeth into complaints about financial advisors or choose to dismiss them with a wave of their hand. Still, better to consult a vetted advisor before going to the SEC.
Sifting through an advisor’s track record can really pay off. War stories from more than one advisor may be a red flag. And it’s not nosy to know how they get paid – some pocket hourly fees, others thrive on commission. But remember, a spotty past has a way of staying on their record.
If you feel wronged by your financial advisor, don’t hesitate to reach out. We’ll give you a no-cost consultation to talk it over with one of our skilled investment attorneys.
Before you bring in financial guidance, it is essential to do your homework. As the infamous investor Warren Buffett once said, “It’s only when the tide goes out that you discover who’s been swimming naked.” Make sure your advisor isn’t one of them. Did you know it’s reported that one in four financial advisors have received at least one formal complaint? That’s a fact that highlights the importance of vetting whoever is handling your hard-earned money extensively.
Remember, you can check the record of any financial advisor through FINRA’s BrokerCheck service. Find their FINRA CRD number and do your due diligence. The peace of mind you’ll get from knowing you have trustworthy help on your financial journey is, in a word, priceless.
