Merrill Lynch Complaints: Regulatory Review

Merrill Lynch – Broker Misconduct and Regulatory Review

The White Law Group is investigating potential securities claims involving MERRILL LYNCH, Pierce, Fenner & Smith.

Merrill Lynch, Pierce, Fenner & Smith Inc. (CRD#: 7691/SEC#: 801-14235,8-7221) has long been one of the most prominent broker-dealers in the U.S. However, the firm has also faced significant regulatory scrutiny over the years. In fact, since our last update, at least 12 new regulatory actions have been reported, further highlighting ongoing concerns related to supervisory failures, market conduct, and investor protection.

This updated review by the securities fraud attorneys at The White Law Group summarizes recent FINRA and SEC sanctions against Merrill Lynch, as well as customer complaints and broker misconduct findings. If you’ve experienced investment losses with Merrill Lynch, these issues may be relevant to potential claims through FINRA arbitration.

The White Law Group, a national securities fraud law firm, is reviewing the regulatory history of Merrill Lynch and its sales practices. This review highlights regulatory actions, supervisory failures, and broker misconduct that may be relevant for investors pursuing claims through FINRA arbitration.

Firm Overview and Disclosures

According to FINRA’s BrokerCheck, Merrill Lynch has:

• 1,477 total disclosures
• 598 regulatory events
• 874 arbitration claims

Regulatory investigations have involved products such as options, non-traded REITs, limited partnerships, variable annuities, and mutual funds.

Recent FINRA Sanctions

• Market Order Violations – February 20, 2025
  Merrill Lynch was fined $275,000 for accepting equity market orders prior to secondary market trading and for failing to maintain a supervisory system under FINRA Rule 5131(D)(4). The firm was censured and required to certify remediation.
• Transaction Reporting Failures – September 30, 2024
  Merrill was fined $2 million for failing to accurately report execution times and short sales and for inadequate supervisory systems related to transaction reporting.
• Options Reporting Deficiencies – September 23, 2024
  FINRA fined Merrill Lynch $425,000 for failing to meet obligations related to options position reporting and large trader identification.
• Trade Surveillance Issues – August 28, 2024
  Merrill consented to a $350,000 fine for deficiencies in trade surveillance systems regarding options order handling and reporting.
• Manipulative Trading Activities – August 30, 2024
  Merrill Lynch and BofA Securities were jointly fined $3 million for using flawed third-party surveillance systems, failing to detect manipulative trading practices such as wash trading and prearranged trading. The firms violated FINRA Rules 3110 and 2010.

Supervisory and Recordkeeping Violations

• Customer Overcharges – July 1, 2024
  Merrill Lynch agreed to reimburse $1.5 million to 2,000+ customers for fees incurred due to unsuitable product placement in brokerage accounts instead of advisory accounts.
• Execution & Recordkeeping Failures – May 9, 2024
  FINRA fined Merrill $825,000 for supervisory deficiencies related to equity order execution and recordkeeping. Merrill was censured and required senior management certification.
• Cold Calling Violations – May 4, 2023
  Merrill Lynch paid $1.4 million to FINRA and New Hampshire regulators for violations of the national Do-Not-Call registry between 2018 and 2020. This was the firm’s second telemarketing violation in New Hampshire.
• Failure to Supervise Broker Churning – December 2020
  Merrill Lynch paid a $26 million settlement, including $24.25 million in restitution, for failing to supervise ex-advisor Charles Kenahan, who engaged in churning, unauthorized trading, and use of unsuitable leveraged products.

Mutual Fund Sales Violations

• June 1, 2022: Merrill paid $15.2 million in restitution for supervisory failures in Class C mutual fund share sales.
• June 4, 2020: Merrill paid $7.2 million in restitution for failing to apply mutual fund reinstatement rights.
• June 6, 2014: Merrill paid $32.2 million (including an $8 million fine) for overcharging retirement and charitable accounts on mutual fund sales.

Broker Misconduct & Customer Complaints

• William King – Unsuitable Investments
  King resigned in April 2023 after 28 customer complaints, including allegations of unauthorized options trades and misrepresentation of annuities. The White Law Group filed a FINRA claim related to his conduct.
• Robert Gerstein – Unsuitable Short-Term Trading
  In July 2023, Gerstein was suspended for six months, fined $5,000, and ordered to repay $129,496 for unsuitable trading of mutual funds and complex products.
• Forrest Jones – Fraud Scheme
  Jones was barred in 2022 following SEC allegations he defrauded investors out of $3.7 million through a high-risk, unregistered investment scheme.
• Marcus Boggs – Wire Fraud
  Boggs pleaded guilty in 2021 to stealing $3 million from clients. He was barred by FINRA and the SEC after multiple customer complaints and a termination by Merrill in 2018.
• Isaiah T. Williams Jr. – Barred by FINRA (April 11, 2025)
  Williams was permanently barred after refusing to cooperate with FINRA’s investigation into alleged misappropriation, unsuitable strategies, and outside business activity. He voluntarily resigned in December 2024. Multiple pending disputes seek millions in damages.

FINRA Rule 3110 – Supervision

FINRA Rule 3110 requires firms like Merrill Lynch to establish a supervisory system that ensures compliance with securities laws. This includes periodic inspections, review of account activity, and supervision of representatives to protect investors.

Recovering Investment Losses – The White Law Group

The White Law Group represents investors nationwide in FINRA arbitration claims involving stock fraud, churning, unsuitable investments, unauthorized trading, and other forms of broker misconduct. If you invested with Merrill Lynch and have concerns, contact us at 888-637-5510.

Frequently Asked Questions (FAQs) : Merrill Lynch

1. Can I recover losses from investments?

Possibly. If your losses were due to unsuitable recommendations, unauthorized trades, or other broker misconduct, you may be eligible to file a FINRA arbitration claim.

2. How many regulatory actions has Merrill Lynch faced?

Merrill Lynch has 1,477 disclosures, including 598 regulatory events and over 870 arbitration claims, according to FINRA.

3. What is broker churning, and how did it relate to Merrill Lynch?

Churning is excessive trading for commissions, often harming the client. Merrill Lynch paid a $26 million settlement for failing to supervise Charles Kenahan, who allegedly engaged in churning.