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Coral Gables, FL 33134

Merrill Lynch Pays Nearly $10 Million To Resolve Case Over Undisclosed Fees To Investors

On April 3rd, 2023, the Securities and Exchange Commission (SEC) announced enforcement action against Merrill Lynch, Pierce, Fenner & Smith Incorporated, the large New York City based brokerage firm. Merrill Lynch charged excessive undisclosed advisory fees to investors, including in Florida. Below, our Miami investor rights attorneys discuss the enforcement action.

SEC Enforcement Action: Brokerage Firm Charged Excessive and Undisclosed Fees 

The SEC took regulatory enforcement action against Merrill Lynch. Without admitting or denying any wrongdoing in the case, the New York-based broker-dealer will pay at least $9.5 million in financial penalties. $4 million will go directly to the investors who were affected by the improper practices as financial restitution. They will also receive nearly $800,000 in interest. The firm will also pay more than $4.5 million as part of a civil fine.

What happened? Between May 2016 and July 2020, Merrill Lynch provided advisory clients with programs involving foreign currency exchanges. While the company disclosed markups or markdowns on these exchanges, it failed to reveal an additional fee called a “production credit.” In over 80% of transactions, this fee was equal to or exceeded the disclosed markup or markdown. Merrill Lynch paid a portion of these credits to its financial advisors as commissions.

 Why Fees Matter So Much for Investors (Could Be Huge Difference in Returns)

 Fees play a crucial role in determining an investor’s overall returns, as they can significantly impact long-term gains. Higher fees can erode investment returns, potentially causing a substantial difference in an investor’s final portfolio value. For instance, seemingly small differences in fees can compound over time, leading to vast disparities in overall performance. Of course, this means that investors should always be diligent in understanding and comparing fee structures before selecting investment products or advisors. They deserve full and accurate information from brokers and brokerage firms. Excessive and undisclosed fees are not acceptable.

Brokerage Firms May Be Legally Liable for Undisclosed Fees 

Brokerage firms may face legal consequences if they fail to disclose fees to their clients. Transparency in fee structures is essential for clients to make informed decisions about their investments. Not disclosing fees can be considered a breach of fiduciary duty, misleading clients and undermining their trust. If brokerage firms are found to have violated regulations or legal obligations, they may be held accountable for their actions. If you suffered any type of financial damages—including lower returns—because of undisclosed fees by your broker or brokerage firm, you may have a viable legal claim for financial relief. An experienced investor rights lawyer can review the matter and help you determine the proper course of action.

 Schedule a Completely Confidential Case Review With a Florida Investor Rights Lawyer

At ​Carlson & Associates, P.A., our Florida investor rights lawyers are passionate and results-first advocates for clients. If you or your family member suffered financial losses due to improper and undisclosed fees, we are more than ready to help you pursue the compensation that you deserve. Contact us at our Miami law office today to set up a fully private case evaluation.



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Coral Gables, Florida 33134

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