Finra panel orders Merrill to pay $1.3M award

By Bruce Kelly

Oct 21, 2012 @ 12:01 am (Updated 4:47 pm) EST

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.


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. Twitter: @bdnewsguy