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FINRA investigation results in overcharged clients being repaid

| Jun 11, 2020 | FINRA |

Pennsylvanians who place their trust in financial advisors and pay the necessary fees might be surprised to discover they were overcharged. Many people are unaware of certain details in their agreements and do not realize when they are being taken advantage of. Recently, the prominent financial services company Merrill Lynch was ordered to pay customers restitution for this.

The Financial Industry Regulatory Authority (FINRA) required Merrill Lynch to pay $7.2 million to customers after allegations of overcharging with mutual funds. The company did not admit or deny the allegations. These incidents were said to have occurred from April 2011 through April 2017. Overall, the clients who were subjected to these excess charges had more than 13,000 accounts with the company. There was a lack of oversight meant to prevent this from occurring.

FINRA said that the missteps at Merrill Lynch deprived customers of millions of dollars when they bought mutual funds. There are basic rights mutual fund issuers offer depending on what type of purchases customers make. That includes recovering deferred sales charges or not being obligated to pay a front-end sales charge. The company checked for this manually. This lent itself to mistakes being made in calculating what clients were supposed to be charged and when they should have been given certain benefits and waivers. The absence of monitoring was also a problem.

FINRA is in place for regulation and enforcement with financial companies on the New York Stock Exchange. Any FINRA member will automatically agree on terms to settle complaints. For those who discover they have been negatively impacted by illegal behavior on the part of a financial company, having legal advice may be essential to full recovery. A firm with experience in FINRA cases may provide advice and guidance on how to proceed.