Merrill Lynch is facing a hefty $3.7 million bill after a financial arbitration ruling. Two clients, Qun He and Haihui Zhang, successfully sued the firm, claiming Merrill Lynch violated securities laws and acted negligently in its investment recommendations.
Unsuitable Investments and Losses
The clients alleged that a Merrill Lynch broker steered them into illiquid private equity investments through proprietary feeder funds. These funds, managed by big names like Apollo Global Management, KKR, and Blackstone, were touted as offering 15-20% annual returns. However, after fees, the actual returns were closer to a dismal 3%.
Arbitration Decision
The case went to arbitration through FINRA (Financial Industry Regulatory Authority). The arbitrators ruled in favor of the clients, ordering Merrill Lynch to pay:
- $2.73 million in compensatory damages
- $2,002 in costs
- $954,634 in attorney’s fees
Client’s Attorney Speaks Out
Michael Bixby, the attorney representing He and Zhang, stated that the ruling reflects the arbitrators’ finding of Merrill Lynch’s misconduct. He expressed satisfaction with the outcome.
Disclaimer:
This information is for news purposes only and not financial advice. Always conduct thorough research before making any investment decisions./p>