Merrill Lynch Fined $10 Million for Misleading Investors in Structured Note Offering Materials

By July 19, 2016 September 20th, 2017 News

Merrill Lynch agreed to pay $10 Million to settle charges levied by the Securities and Exchange Commission (“SEC”), as detailed in a recent SEC release.  The release indicates that Merrill Lynch (subsidiary of Bank of America Corporation) was responsible for misleading statements in offering materials provided to retail investors for structured notes linked to a proprietary volatility index.

The SEC order instituting a settled administrative proceeding reveals that the offering materials failed to disclose certain costs associated with the structured notes.  Based on this omission, the SEC alleged, investors were mislead to believe that a return of 5.93% from starting value of the volatility index till the maturity date was sufficient to earn back their original investment at maturity.  The undisclosed cost was the “execution factor” that imposed a cost of 1.5% of the index value each quarter. The SEC’s order finds that Merrill Lynch did not have in place effective policies or procedures to ensure its personnel drafted and approved disclosures that adequately disclosed the impact of the execution factor.

This settlement follows an October 2015 settlement of $19.5 Million paid by UBS regarding misleading statements in structured note offering materials.

Fishman Haygood represents investors who have suffered investment losses in claims against their brokers or financial advisors. Our experienced attorneys have brought securities fraud cases in state and federal courts across the nation, as well as in FINRA arbitration. We work to help investors recoup their losses.

Of course, all cases are different. For that reason, we analyze each client’s matter individually and provide our personalized evaluation only after considering all of the facts and circumstances of all possible claims. If you or someone you know is the victim of securities fraud, please contact a Fishman Haygood lawyer today.

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