Tuesday, March 31, 2009

Merrill socked with $39.8 million arbitration award

A FINRA arbitration panel hit Merrill for 39.8 million dollars for a claim arising from it's Advest brokerage unit.

According to InvestmentNews.com, the award arises from conduct at Advest before Merrill's purchase of the firm, but the award is against Merrill.

Under FINRA rules Merrill will have to pay or appeal within 30 days.

While this is on a completely different scale, I keep telling clients that buying a brokerage firm in fraught with risk, since you are responsible for the obligations and conduct of the firm from before your purchase. There is much more involved when a Merrill buys an Advest, but a 39 million dollar arbitration award does help make the point.



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