Photo courtesy: Jonathan Kitchen

Merrill Lynch has had to pay nearly $100 million related to overcharges to retirement accounts and charities.

By Benjamin Snyder
June 16, 2014

Bank of America’s BAC Merrill Lynch has agreed to pay $8 million to settle allegations that it excessively charged over 47,000 charities and retirement account owners in fees. As part of the settlement, the company will also reimburse $24.4 million to its affected customers.

Merrill has already repaid $64.8 million as part of the settlement, the Financial Industry Regulatory Authority (FINRA), a Wall Street regulator, said on Monday. The total restitution is $97.2 million for its “disadvantaged investors,” according to a FINRA release.

Mutual fund fees can vary depending depending on the type of investment. Class A shares have lower fees than Class B and C shares.  Upfront sales charges are typically waived for retirement accounts and charities.

However, since 2006, Merrill Lynch failed to waive the sales charges for customers when offering Class A shares, according to FINRA, despite the fact that many of the mutual funds offered by Merrill Lunch offered the waivers. “Merrill Lynch learned in 2006 that its small business retirement plan customers were overpaying, but continued to sell them more costly shares and failed to report the issue to FINRA for more than five years,” FINRA said.

“Merrill Lynch failed to offer available waivers to customers, including small business retirement accounts and charitable organizations,” said Brad Bennett, FINRA’s executive vice president and enforcement chief. “When firms fail to do so, we will take appropriate action.”

 

 

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