A securities arbitration claim of $5 million has been filed against Merrill Lynch by a Freeport, Bahamas couple who say the preferred financial company stocks the company sold them were unsuitable, according to the law firm representing the couple.
The arbitration claim was filed with the Financial Industry Regulatory Authority Inc. of New York and Washington at the end of June by Klayman & Toskes PA, a law firm in Boca Raton, Fla. The couple held accounts with Merrill Lynch’s Boca Raton branch office and granted their financial adviser discretionary authority to manage their assets, according to the complaint.
“Instead of recommending a suitable investment strategy to reduce the investors’ risk, Merrill Lynch engaged in an aggressive strategy of purchasing numerous financial preferred stocks, thereby overconcentrating the claimants’ accounts,” one of which had been pledged as collateral against loans taken out through Merrill Lynch, the law firm said in a statement.
The couple suffered significant losses and eventually received a margin call of about $2 million, according to the statement.
The preferred stocks were in such financial companies as Deutsche Bank AG, Bank of America Corp., Credit Suisse Group AG, Ambac Financial Group Inc., ING Groep NV and Barclays Global Investors.
Bill Halldin, a spokesman for Merrill Lynch & Co. Inc. of New York, declined to comment.
The couple making the complaint does not want their names publicized, said Steven Toskes, a partner at Klayman & Toskes.