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When you invest with a major investment firm like Merrill Lynch, you expect your money to be safe. You expect Merrill Lynch to follow the rules, and you expect the firm’s advisors to make investment decisions with your best interests in mind.

Unfortunately, this isn’t always the case. Merrill Lynch—like many other major investment firms—has faced numerous complaints over the past several years. This includes a complaint that led to a $415 million settlement with the U.S. Securities and Exchange Commission (SEC) for “misusing customer cash and putting customer securities at risk.” We regularly hear from investors who have lost money with Merrill Lynch, and we have investigated and successfully pursued claims against the firm on multiple occasions.

How Do I File a Complaint Against Merrill Lynch?

For most individual investors filing a complaint against Merrill Lynch will involve going to FINRA arbitration. The Financial Industry Regulatory Authority (FINRA) works with the SEC to regulate the securities industry, and it provides an arbitration forum for investors to pursue claims against their investment firms and advisors.

On FINRA BrokerCheck, Merrill Lynch has 873 reported arbitration cases. This only includes cases filed against the main Merrill Lynch entity. The firm has had numerous affiliates and subsidiaries over the years and far more individual investment advisors.

While investors can pursue FINRA arbitration on their own, this is not the best choice—especially when dealing with a major investment firm like Merrill Lynch. There are strict procedural requirements, and investors must be able to prove both (i) that their investment losses are fraudulent and (ii) how much they are entitled to recover. Firms like Merrill Lynch have teams of defense lawyers, and they deploy these teams to overwhelm investors who attempt to assert their legal rights.

Engaging an investment fraud law firm to represent you helps turn the tables in your favor. You can hire your lawyers to handle your FINRA arbitration claim—and you can do so at no out-of-pocket cost. Even when taking contingency fees into account, engaging a law firm to represent you is typically the best way to maximize your financial recovery.

Can I Sue Merrill Lynch?

If you believe that you have suffered fraudulent investment losses with Merrill Lynch, suing the firm may be an option. However, rather than going to court, filing a claim in FINRA arbitration may be the best route to recover your investment losses. Investment firms like Merrill Lynch are required to submit to arbitration for investor claims, and FINRA arbitration is faster and involves fewer costs than pursuing litigation in state or federal court.

While FINRA arbitration is quicker and less expensive than litigation in court, defrauded investors can seek the same remedies in both venues. As a result, you are not giving anything up by taking advantage of the benefits of arbitration. If you need to know more about filing a claim against Merrill Lynch, you should consult with an investment fraud lawyer promptly.

What was the Merrill Lynch Scandal?

Merrill Lynch has been through more than its fair share of scandals. One of these scandals resulted in the firm’s $415 million settlement with the SEC in 2016. Following an SEC investigation, Merrill Lynch agreed to settle the Commission’s charges that the firm “misused customer cash to generate profits for the firm and failed to safeguard customer securities from the claims of its creditors.”

Among other things, the SEC’s investigation found that Merrill Lynch put customers’ funds at risk by “engag[ing] in complex options trades [with customer funds] that lacked economic substance.” According to the Commission, if Merrill Lynch had failed while these trades were pending, its customers “would have been exposed to a massive shortfall.” The SEC also found that the firm held as much as $58 billion worth of customers’ securities in an account that was subject to a lien by the firm’s bank.

Two years later, Merrill Lynch entered into a $42 million settlement with the SEC following allegations that the firm “falsely informed customers that it had executed millions of orders internally when it actually had routed them for execution at other broker-dealers.” In connection with this scandal, the SEC found that the firm reprogrammed its systems to generate false reports, altered records and reports, and provided misleading responses to customer inquiries.

These are just two examples. Additional recent scandals in which Merrill Lynch has been involved include:

  • Being part of a $1.1 billion settlement with the SEC in 2022 related to “widespread recordkeeping failures.”
  • Settling SEC charges of failing to disclose conflicts of interest to its customers for $8.9 million in 2018.
  • Entering into a $15 million settlement with the SEC in 2018 over allegations that the firm misled customers into overpaying for residential mortgage-backed securities.

Merrill Lynch has settled numerous other allegations with the SEC as well, and it has faced far more allegations from its customers in private litigation and FINRA arbitration.

What Happened to Merrill Lynch During the Financial Crisis?

Like many investment firms, Merrill Lynch faced significant struggles during the financial crisis of 2008. However, Merrill Lynch’s struggles were even greater than most, as the firm was in a long-running court battle with several plaintiffs, including the State Teachers Retirement System of Ohio and the Teacher Retirement System of Texas, who were reportedly planning to seek $20 billion at trial.

With Merrill Lynch reportedly just days away from financial collapse, the firm agreed to a $50 billion takeover by Bank of America. This saved Merrill Lynch, and Bank of America subsequently entered into a confidential settlement related to the firm’s pending litigation.

Schedule a Free Consultation at Zamansky LLC

Do you have an investment fraud claim against Merrill Lynch? If you are a Merrill Lynch customer and you have suffered losses that you have reason to believe may be fraudulent, you should consult with a lawyer promptly. To schedule a free consultation at Zamansky LLC, call us at 212-742-1414 or tell us how we can reach you online today.

Client Reviews

“Jake Zamasky and his colleagues represented me in a FINRA arbitration case against a large multinational bank and succeeded in obtaining an award for the full amount of my investment losses. I would highly recommend the Zamansky firm for their experience in securities litigation, their level of detailed research and case preparation, and their ability to effectively fight for what’s right.”

Richard R.

“Throughout my entire case, Jake Zamansky was incredibly responsive and spent time walking me through each step of the process. He is professional and worked with my challenging schedule, even meeting with me nights and on weekends. He knew exactly which turn to take when it came to my case and yet was respectful of any decisions I wanted to make resulting in a positive outcome.”

Donald A.

“Jake Zamansky and his firm represented me in a FINRA arbitration case to recover investment losses. Jake and his team were very professional and worked very hard preparing for trial and then reaching a substantial settlement of our case. I would highly recommend them.”

William E.

“Jake Zamansky represented me in a FINRA arbitration case which allowed me to recover a substantial portion of investment losses. He is truly an expert in this space and I would highly recommend him to those investors who may have been been a victim of investment fraud.”

Chris K.

“Jake and his team did a great job communicating with me throughout the process of my lawsuit. I would recommend him to anyone looking to sue UBS for unethical practices.”

Mike A.
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