Did You Overpay for Mortgage Bonds?
The SEC has charged Merrill Lynch with misleading customers on mortgage bond prices and overcharging for trades to increase profits.
Mortgage Bond Fraud
The Securities and Exchange Commission (SEC) has ordered Merrill Lynch to pay $15.7 million to settle allegations of securities fraud. According to an SEC investigation, Merrill Lynch traders and salespeople overcharged customers for residential mortgage bond trades between 2009 and 2012. Merrill Lynch RMBS traders lied to bank customers about the actual price they paid for the securities, according to the SEC. Since mortgage bond pricing is not public information and bonds are not publicly traded on an exchange, customers were easily duped by broker-dealers who negotiated the bond transactions.
The SEC investigation revealed that Merrill Lynch RMBS traders lied to customers about mortgage bonds prices and increased the prices to raise their profits on the trades. By deceiving customers with misleading statements and undisclosed, excessive markups on mortgage bond trades, Merrill Lynch acted recklessly according to the SEC. The SEC further alleged that Merrill Lynch RMBS traders charged some customers twice the amount they should have paid. Although Merrill Lynch had policies in place that prohibited traders from making false or misleading statements, they failed to implement the procedures and monitor traders' communications with customers according to the investigation.
The SEC investigation found that Merrill Lynch failed to properly supervise RMBS traders. By doing so, they allowed brokers to participate in mortgage bond trades that violated anti-fraud federal securities laws. As part of the settlement agreement, Merrill Lynch has been ordered to pay more than $10.5 million to customers and a fine of $5.2 million to the SEC for illegal securities fraud actions. Merrill Lynch agreed to the settlement without admitting or denying SEC allegations and issued a statement that they have taken steps to improve in-house procedures to prevent repeated actions.
Stockbrokers and financial advisors have a duty to recommend investments that are appropriate based on their clients' specific circumstances. Unfortunately, many investors are deceived by unethical brokers who put their profits above their clients' best interests. When an investor suffers financial losses due to fraud and investment misconduct, a claim can be filed through an investment fraud attorney. In most cases, claims against brokers are handled through FINRA arbitration.
Every case is different but investors who have been cheated out of their investments due to illegal, fraudulent broker actions can recover damages, which may include their investment principal, expected gains if money had been invested appropriately, arbitration costs, attorney's fees, and punitive damages if egregious misconduct was involved. If you lost money because of broker misconduct, call our investment fraud attorneys at Meyer Wilson today at (800) 738-1960 to schedule a free consultation.
Merrill Lynch, Pierce, Fenner & Smith Inc. Fined $42 Million for Misleading Customers
The Securities and Exchange Commission (SEC) recently announced that Merrill Lynch has agreed to pay $42 million for misleading its customers and its handling of trading orders.
The SEC stated that the wealth management firm told customers that it had performed millions internal orders, when it actually routed them to other broker-dealers for execution, including wholesale market makers and proprietary trading firms.
This is a practice commonly referred to as masking. According to the SEC, Merrill Lynch needed to reprogram its systems to provide misleading responses to customer inquiries, alter reports and records, and falsely report execution venues in order to pull this off.
While Merrill Lynch stopped this practice in May 2013, it failed to inform its customers about its past actions. Instead, it continued to hide its previous misconduct. The SEC’s investigation discovered that the company falsely told its customers that it performed over 15 million child orders comprising comprised more than five billion shares than the company actually completed.
These actions allowed Merrill Lynch to appear far more active as a trading center than it actually was, which in turn reduced the cost of access fees it paid to exchanges at that time.
If you lost money because of your financial adviser’s actions, you may be able to file a lawsuit to secure the compensation you deserve. At Meyer Wilson, our investment fraud lawyers have nearly two decades of experienced handling these types of cases, and will put that knowledge to use fighting for your rights in court or at the negotiation table. Call us at (800) 738-1960 to speak with a member of our firm today, or fill out our online form to schedule a free consultation.
Merrill Lynch, Pierce, Fenner & Smith Inc. To Pay $15.7 Million in Penalties and to Clients
The Securities and Exchange Commission (SEC) recently announced that it ordered Merrill Lynch, Pierce, Fenner & Smith Inc. more than $15 million over charges that its employees mislead customers into overpaying for their Residential Mortgage Backed Securities (RMBS).
According to the SEC, Merrill Lynch agreed to pay $5.2 million in penalties and will repay customers an estimated $10.5 million. The salespeople and traders reportedly deceived customers into overpaying for RMBS by telling them that the company paid more to acquire the securities than it actually did. In addition to that, the SEC also found that the salespeople and traders illegally profited from undisclosed and excessive commissions, also referred to as mark-ups, which as much as doubled the cost for customers in some cases. In the order, the SEC also states that Merrill Lynch did not have the necessary compliance and surveillance procedures in place to detect and prevent this type of misconduct from occurring.
“In opaque RMBS markets, lying to customers about the acquisition price can deprive investors of important information,” said Daniel Michael, Chief of the SEC Enforcement Division’s Complex Financial Instruments Unit. “The Commission found that Merrill Lynch failed in its obligation to supervise traders who allegedly used their access to market information to take advantage of the bank’s own customers.”
If you were the victim of stockbroker misconduct, you may be able to take your case to court to secure the compensation you deserve. Contact our securities fraud attorneys at Meyer Wilson today to discuss your case by calling us at (800) 738-1960, or by filling out our online form to schedule a free case consultation.
Wall Street May Be Chaotic, but That Doesn't Mean Your Investments Should Be Too ￼
This past year, Wall Street has been more chaotic than it has been in recent memory, which is causing investors to worry about the future of their investments. While you may be concerned about what this market volatility means for your future, that doesn’t mean you should throw logic and reason out the window to start investing in potentially enticing, but incredibly risky options.
The Financial Industry Regulatory Authority (FINRA) issued a warning to investors about trading complex, speculative products that are intended to turn a profit on the volatility of the current market. FINRA reported that investors who called in to complain about these investments claim losses of six figures. In an interview with GM Today, FINRA’s Senior Vice President of Investor Education Gerri Walsh told the story of one person who called in and said that he lost everything after using all of his family’s assets to invest in a product that was based on inverse performance of futures on the Chicago Board Options Exchange Volatility Index (VIX).
“One caller we had heard from really lost everything,” Walsh said over the phone. “You’re taking a significant risk and you need to understand that. There’s always risk involved with these products."
Walsh noted that some potential investors first heard about these types of products through financial news media and started using online brokerage accounts to invest on their own, but others were pushed to invest by their brokers. The increased interest in this product is fueled by the massive returns some investors saw over the past couple years, but these brokers have a responsibility to inform their clients of the potential risk of products, as well as carefully investigate any potential product before even bringing it up. These products are not suitable for the vast majority of investors, and brokers need to be sure to explain the significant risk if they even bring up this option in the first place.
If you lost money because you were pressured to invest in a risky option, you may be able to pursue a claim to recover losses. At Meyer Wilson, our investment fraud attorneys have spent their careers working with victims of fraud across the United States, and through our efforts have secured more than $350 million for our clients. Call us at (800) 738-1960 to speak with a member of our firm over the phone, or start out with a free case consultation by filling out our online form.
Meyer Wilson Investigating Stockbroker Misrepresentation Claims Against Broker Andrew Constantinides
Meyer Wilson’s securities fraud attorneys are investigating stockbroker misrepresentation claims against broker Andrew Constantinides (CRD# 5596143).
The Financial Industry Regulatory Authority’s (FINRA) BrokerCheck report states that Andrew Constantinides (CRD# 5596143) was named in a pending customer dispute filed Dec. 23, 2016 alleging stockbroker misrepresentation.
The report states that the client alleges that Andrew Constantinides “made misrepresentations in regards to a particular private placement in which the client was solicited to invest.”
The client is asking for $350,000 in damages in the pending stockbroker misrepresentation complaint.
Andrew Constantinides has been in the securities industry for seven years. He has been registered in Boca Raton, Fl. with Merrill Lynch since June 2016. The pending complaint stems from the time he was registered with Dawson James Securities from 2009 to 2016.
The states where he is a registered stockbroker and investment adviser are Florida, California, Maryland, Minnesota, Montana, New Jersey and South Carolina.
The U.S Securities and Exchange Commission (SEC) protects investors by making sure that all investors, whether large institutions or private consumers, should have access to certain information regarding a potential investment before buying it and for as long as they hold onto that investment.
What is Stockbroker Misrepresentation?
Full disclosure of all relevant information about an investment is one of the most important duties of a stockbroker. Without full disclosure, investors aren’t able to make the best decisions about where to put their money. Failing to disclose all relevant information about an investment is stockbroker misrepresentation.
Federal securities law prohibits stockbrokers and investment advisers from engaging in stockbroker misrepresentation by misleading clients regarding their investments.
Stockbrokers are obligated to provide clients with all the material facts, including the risk level of a stock, any fees connected with the transaction, and the possible return on the investment.
If a stockbroker misrepresents the nature or quality of an investment and the investor loses money, the stockbroker may be held responsible, and investors may be able to recover their losses.
Stockbrokers and investment advisers that withhold or falsify material facts can be investigated for stockbroker misrepresentation and face possible disciplinary action from FINRA, the SEC, or state regulators.
If you lost money investing with Merrill Lynch stockbroker Andrew Constantinides, contact the securities fraud attorneys at Meyer Wilson today. For nearly 20 years, we have provided our clients with experienced legal representation required to secure the financial compensation they deserve.
Through our efforts, we have successfully recovered over $350 million in verdicts and settlements for our clients. Call us to discuss your case with a member of our firm, or fill out our online form to request a FREE case evaluation today.