by Brian Mahany
It certainly seems we are picking on Merrill Lynch these days for not properly supervising their brokers. This post is noexception. [Ed. Note – the author of this piece maintains a small IRA account at Merrill. Because of the sheer size of Merrill Lynch – it employs thousands of stockbrokers – there are always bound to be rogue brokers and advisers who make mistakes.]
In researching my earlier post, I found another arbitration case from this summer involving Merrill. A case in which Merrill Lynch and one of its brokers were found to be liable for clients who invested in the Merrill Lynch Phil Scott Team Income Portfolio. It’s not unusual for some of the “hotter” and bigger brokers to develop their own portfolio. The problem arises when that broker tries to sell all of his or her clients on the single investment. There are many egos in the brokerage industry and those egos can get in the way of sensible investment recommendations.
Take Merrill’s Phil Scott Team. Apparently all the clients of the team seemed to wind up with similar investments, you guessed it, an investment in the Phil Scott Team Income Portfolio. The portfolio was made up solely of equities. That might work for some people who don’t require diversification and and have a more aggressive risk tolerance. It didn’t make sense though for a 90 year old widow in failing health.
An arbitration panel from the Financial Industry Regulatory Authority (FINRA) sided with investors and ordered Merrill Lynch to pay back almost $1 million in losses suffered by the clients.
Stockbrokers have a duty to know their customers and understand their financial needs. Then and only then can they make investment recommendations – recommendations that the law says should be “suitable.” The broker dealer is also responsible to supervise its employees and agents.
If you have been defrauded or lost money to an investment adviser or stockbroker, give us a call. Our investment fraud lawyers may be able to help you get your hard earned money back. For a confidential consultation contact attorney Brian Mahany at (414) 704-6731 (direct) or by email at
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