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June 14, 2013

Merrill Lynch and Wells Fargo Fined

The Financial Industry Regulatory Authority (FINRA) fined both Wells Fargo and Merrill Lynch $2.15 million for the unsuitable recommendation and sale of mutual funds known as “floating-rate bank loan funds.” Not only were Merrill Lynch and Wells Fargo ordered to pay a hefty fine, FINRA also ordered the two firms to pay over three million dollars back to some of the customers that were solicited to purchase the floating-rate bank funds.

According to FINRA, brokers from these companies and associate companies allegedly solicited clients with conservative risk tolerances to purchase the floating-rate bank loan funds. FINRA defined floating-rate bank loan funds as, “… mutual funds that generally invest in a portfolio of secured senior loans made to entities whose credit quality is rated below investment-grade. The funds are subject to significant credit risks and can also be illiquid.”

For more information, visit finra.org