Finra panel orders Merrill to pay $1.3M award

Oct 21, 2012 @ 12:01 am

By Bruce Kelly

Bank of America Merrill Lynch last Tuesday was ordered to pay a $1.3 million arbitration award to a couple whose broker sold them preferred shares of Fannie Mae stock, allegedly despite multiple warnings of its risk.

Those warnings included a “sell” rating from Merrill's own analysts on common shares of the Federal National Mortgage Association.

WIPED OUT

A Financial Industry Regulatory Authority Inc. panel in Boca Raton, Fla., issued the award to the investors, Michelle Billings, 65, and her husband, Robert, 71. The two invested $2.3 million in the Fannie Mae preferred shares in July 2008, two months before Fannie Mae collapsed and was placed into conservatorship, wiping out the couple's investment.

Merrill Lynch Pierce Fenner & Smith Inc., the firm's formal name, “is found liable for breach of fiduciary duty” and was ordered to pay compensatory damages, according to the award.

The Billingses filed their Finra complaint last year.

“We disagree with the decision,” Bill Halldin, a Merrill spokesman, said, declining to comment about a potential appeal.

“We're happy that the arbitration panel understood the fiduciary duty and that the broker breached the duty in regard to Fannie Mae preferred shares,” said Jeffrey Erez, the attorney for the Billingses.

bkelly@investmentnews.com Twitter: @bdnewsguy

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

INTV

Why some retirement plan advisers think Fidelity is invading their turf

InvestmentNews editor Frederick P. Gabriel Jr. and reporter Greg Iacurci talk about this week's cover story that looks at whether Fidelity Investments is stepping on the toes of retirement plan advisers.

Latest news & opinion

Is Fidelity competing with retirement plan advisers?

As the Boston-based mutual fund giant expands the products and services it brings to the retirement market, some financial advisers say the firm is encroaching on their turf.

Gun violence hits investment strategies, sparks political debates with advisers

Screening out weapons companies has limited downside.

Whistleblower said to collect $30 million in JPMorgan case

The bank did not properly disclose that it was steering asset-management customers into investments that would be profitable for JPMorgan Chase.

Social Security underpaid 82% of dually entitled widows and widowers

Agency failed to tell survivors that they could switch to a higher retirement benefit later.

If Finra eases firm oversight of outside business activities, broker-dealers could lose revenue

Brokerage firms would no longer be able to charge reps for supervising nonaffiliated RIAs.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print