Merrill Lynch Fined For Fair Pricing and Supervisory Violations

The Financial Industry Regulatory Authority (FINRA) has announced that Merrill Lynch has been fined $1.9 million and ordered to pay restitution in the amount of $540,000 for fair pricing violations as well as supervisory violations related to the purchase of certain distressed securities.

According to FINRA, more than 700 transactions in Motors Liquidation Company (MLC) Senior Notes with retail customers were affected over a two year period.   FINRA found that “Merrill Lynch purchased MLC Notes at prices that were not fair to its retail customers.”   Specifically, Merrill Lynch was found to have purchased the notes from retail customers for anywhere between 5.3% and 61.5% below market price, leaving customers significantly disadvantaged.  Merrill Lynch would later selling those shared purchased from retail customers to other broker-dealers at the prevailing market price.

Another problem FINRA found was that Merrill Lynch failed to have an adequate supervisory system in place to detect whether the prices paid to retail customers on the MLC Notes were fair and consistent with prevailing market prices.

Proper supervision is critical in the brokerage industry for the protection of investors.  Unfortunately many financial firms have significant lapses in their supervision over their personnel.  When that happens, customers can incur substantial losses unnecessarily.

Customers who lose money as a result of supervisory failings on the part of their broker-dealer may be entitled to recover those losses.

If you or a family member may have lost money and you believe the account was not properly supervised, contact the securities fraud lawyers at Malecki Law for a free consultation and case evaluation at (212) 943-1233.

Malecki Law takes a proactive and informed approach to the financial news of today: actively engaging in fact-finding analysis on prospective cases from around the world. Our thorough knowledge of securities law’s history and fine points makes us ideal consultants for investors who have suffered losses due to misadvice from their broker or other financial counsel.