FINRA announced last month that they fined Merrill Lynch, Pierce, Fenner & Smith, Inc. $8 million for failing to waive mutual fund sales charges for certain charities and retirement accounts. Merrill Lynch was ordered to pay $24.4 million in restitution to affected customers, in addition to $64.8 million the firm has already repaid to disadvantaged investors.
Brad Bennett, FINRA’s Executive Vice President and Chief of Enforcement, said, “Merrill Lynch failed to offer available waivers to customers, including small business retirement accounts and charitable organizations. FINRA’s commitment to investor protection is highlighted by the significant restitution component of this settlement, which reinforces that investors must be able to trust that their brokerage firm will offer the lowest-cost share classes available to them. When firms fail to do so, we will take appropriate action.”
Merrill Lynch’s written supervisory procedures provided little information on the waivers. Even after the firm learned that it was not providing sales charge waivers to eligible accounts, Merrill Lynch relied on its financial advisors to waive the charges, but failed to adequately supervise the sale of these products or properly train or notify its financial advisors about lower-cost alternatives.
Investors can obtain more information about, and the disciplinary record of, any FINRA-registered broker or brokerage firm by using FINRA’s BrokerCheck. Investors can access BrokerCheck at www.finra.org/brokercheck or by calling (800) 289-9999.