If you suffered investment losses at Merrill Lynch, you may have legal options to recover your money. Merrill Lynch, Pierce, Fenner & Smith Inc. (CRD# 7691) has accumulated 1,477 regulatory disclosures according to FINRA BrokerCheck, including 598 regulatory events and over 870 arbitration claims from investors who experienced losses due to broker misconduct.
Our securities litigation firm represents investors who have lost money through unsuitable investments, churning, unauthorized trading, and other forms of broker misconduct at Merrill Lynch. Attorney Gary Varnavides brings a unique perspective to these cases, having spent 10 years at Sichenzia Ross Ference LLP defending broker-dealers, giving him insider knowledge of how firms like Merrill Lynch handle investor disputes.
Key Takeaways
- Merrill Lynch has 1,477 FINRA disclosures, including 598 regulatory events and 874+ arbitration claims
- Recent 2024-2025 FINRA fines exceed $7 million for various supervisory and compliance failures
- The firm paid $9.5 million in 2025 to settle a single investor fraud claim (Reshad Jones case)
- You have 6 years from the event to file a FINRA arbitration claim, but state limitations may be shorter
- Most Merrill Lynch investor disputes are resolved through FINRA arbitration, not court litigation
Merrill Lynch Regulatory History and Recent Violations
Merrill Lynch, now a subsidiary of Bank of America, maintains one of the largest regulatory disclosure records among major broker-dealers. According to FINRA, the firm has faced consistent enforcement actions spanning supervisory failures, transaction reporting violations, and customer protection issues.
Recent FINRA Fines (2024-2025)
| Date | Violation | Fine Amount |
|---|---|---|
| February 2025 | Market order violations and supervisory failures | $215,000 |
| September 2024 | Transaction reporting failures | $2,000,000 |
| August 2024 | Manipulative trading (wash trading, prearranged trades) | $3,000,000 |
| May 2024 | Equity order supervision failures | $825,000 |
| July 2024 | Customer fee overcharges (1,300+ accounts) | $1,500,000 restitution |
These regulatory actions demonstrate ongoing compliance issues at Merrill Lynch that may have contributed to individual investor losses. When a firm fails to maintain adequate supervisory systems, investors often bear the consequences through unsuitable recommendations, excessive trading, or outright fraud by individual brokers.
Types of Broker Misconduct at Merrill Lynch
Investors who suffer losses at Merrill Lynch often experience one or more of the following types of broker misconduct. Understanding these practices helps you identify whether you have a viable claim for investment fraud or negligence.
Churning
Churning occurs when a broker engages in excessive trading to generate commissions rather than serve your investment goals. FINRA considers churning a violation of FINRA Rule 2111 (Suitability) and constitutes both negligent and fraudulent conduct. In the Charles Kenahan case, Merrill Lynch paid $40.3 million to settle churning allegations affecting over 100 clients.
Unsuitable Investments
Brokers must recommend investments that match your financial situation, risk tolerance, and investment objectives. Unsuitable recommendations violate FINRA suitability rules and can result in significant investment losses. In October 2024, the SEC ordered Merrill Lynch to pay $3.8 million for recommending an excessively risky options strategy to clients.
Unauthorized Trading
Most brokerage accounts are nondiscretionary, meaning your broker must obtain your permission before executing trades. Unauthorized trading occurs when a broker trades in your account without your consent. William King resigned from Merrill Lynch in April 2023 after 28 customer complaints involving unauthorized options trades.
Misrepresentation and Fraud
Brokers who make false or misleading statements about investments violate securities laws. In 2025, Merrill Lynch paid $9.5 million to settle claims by former NFL player Reshad Jones, whose advisor allegedly misappropriated over $2.5 million through 133 separate fraudulent transactions.
Major Merrill Lynch Cases and Settlements (2024-2025)
Recent settlements and regulatory actions against Merrill Lynch demonstrate that the firm faces significant liability when brokers engage in misconduct. These cases show the potential for investors to recover substantial losses through FINRA arbitration.
Reshad Jones Settlement (August 2025)
Former Miami Dolphins safety Reshad Jones received a $9.5 million settlement from Merrill Lynch after filing FINRA arbitration case No. 24-02575. Jones alleged his financial advisor Isaiah Thomas Williams misappropriated $2.5 million through fraudulent transfers, made unsuitable investment recommendations, and engaged in improper outside business activities. FINRA permanently barred Williams in April 2025 after he refused to cooperate with the investigation.
Historical Major Settlements
| Year | Case/Violation | Amount |
|---|---|---|
| 2020 | Charles Kenahan churning (New Hampshire settlement) | $26,000,000 |
| 2020 | Kenahan customer disputes settlement | $40,300,000 |
| 2016 | SEC settlement for misusing customer cash | $415,000,000 |
| 2022 | Mutual fund overcharges restitution | $15,200,000 |
| 2023 | Anti-money laundering failures | $6,000,000 |
How to File a FINRA Arbitration Claim Against Merrill Lynch
When you opened your Merrill Lynch account, you likely signed an arbitration agreement requiring disputes to be resolved through FINRA arbitration rather than court litigation. This process provides investors with a structured method to recover investment losses from broker misconduct.
The FINRA Arbitration Process
Step 1: Statement of Claim
File a formal Statement of Claim through the FINRA DR Portal. This document outlines your investment losses, the broker misconduct that caused them, and the compensation you seek. Filing fees vary based on your claim amount.
Step 2: Discovery Phase
Both parties exchange relevant documents and information. This simplified discovery process allows your attorney to obtain account statements, correspondence, internal compliance records, and other evidence of misconduct.
Step 3: Arbitration Hearing
Present evidence and testimony to a panel of 1-3 neutral arbitrators. The panel issues a binding written decision, and Merrill Lynch must pay any monetary award within 30 days.
Time Limits for Filing Your Claim
According to FINRA Rule 12206, you have 6 years from the event giving rise to your claim to file for arbitration. However, state statutes of limitations may be shorter. In California, certain securities claims must be filed within 3 years. Do not delay in consulting with a securities attorney about your potential claim.
Why Attorney Experience Matters in Merrill Lynch Cases
Merrill Lynch, as part of Bank of America, has substantial legal resources to defend against investor claims. The firm employs experienced securities defense attorneys who know how to challenge claims and minimize payouts. Your choice of legal representation can significantly impact your case outcome.
Gary Varnavides spent 10 years at Sichenzia Ross Ference LLP defending broker-dealers in securities litigation and FINRA arbitration proceedings. This defense-side experience provides crucial insight into how firms like Merrill Lynch approach investor disputes, the strategies they employ, and the weaknesses in their defenses. Now representing investors, Gary uses this insider knowledge to pursue aggressive litigation against broker-dealers who harm their clients.
Defense-Side Experience
- 10 years defending broker-dealers at major securities law firm
- Deep understanding of FINRA arbitration from the defense perspective
- Knowledge of common defense strategies and how to counter them
- Experience with complex securities litigation procedures
Recognition and Licensing
- Super Lawyers Rising Star 2015-2023 (top 2.5% in NY Metro)
- Licensed in California, New York, and New Jersey
- Founded Varnavides Law, PC for investor representation
- Los Angeles-based for California investor cases
Common Merrill Lynch Broker Misconduct Patterns
Analyzing Merrill Lynch’s regulatory history reveals patterns of broker misconduct that affect investors. Understanding these patterns helps identify whether your losses may be recoverable through FINRA arbitration.
Supervisory Failures
Merrill Lynch has repeatedly been sanctioned for failing to supervise its registered representatives. Under FINRA Rule 3110, broker-dealers must establish and maintain systems to supervise their brokers’ activities. When these supervisory systems fail, investors suffer preventable losses.
The August 2024 $3 million fine for manipulative trading resulted directly from Merrill Lynch using flawed third-party surveillance systems that failed to detect wash trading and prearranged trades. Similarly, the $26 million Charles Kenahan settlement stemmed from Merrill Lynch’s failure to supervise a broker who engaged in churning for years without detection.
Individual Broker Misconduct
Several Merrill Lynch brokers have faced significant regulatory actions and customer complaints in recent years:
- Isaiah Thomas Williams Jr.: Permanently barred by FINRA in April 2025 for misappropriating client funds and refusing to cooperate with investigations
- William King: Resigned in April 2023 after 28 customer complaints; 29 lawsuits filed alleging similar misconduct involving unauthorized options trades
- Charles Kenahan: Terminated in July 2019; customers received $40.3 million in settlements for churning and unsuitable recommendations
- Marcus Boggs: Pleaded guilty in 2021 to stealing $3 million from clients; permanently barred from securities industry
- Forrest Jones: Barred in 2022 following SEC allegations he defrauded investors out of $3.7 million through unregistered investments
What Damages Can You Recover?
Investors who prove their Merrill Lynch investment losses resulted from broker misconduct may recover various types of damages through FINRA arbitration:
Compensatory Damages
- Actual investment losses attributable to misconduct
- Lost profits you would have earned with proper investment management
- Interest on losses from date of misconduct
- Out-of-pocket expenses related to the fraud
Additional Recovery
- Excessive commissions and fees charged
- Attorney fees in some cases
- Expert witness costs
- Punitive damages in egregious cases
Steps to Evaluate Your Merrill Lynch Claim
If you experienced investment losses at Merrill Lynch, take these steps to evaluate whether you have a viable claim for recovery:
- Gather your account documents: Collect account statements, trade confirmations, correspondence with your broker, and any investment recommendations you received
- Review your investment objectives: Consider whether the investments made in your account matched your stated risk tolerance and financial goals
- Calculate your losses: Determine the total amount you lost and when those losses occurred
- Check for excessive trading: Look for frequent buying and selling that generated commissions without benefiting your portfolio
- Identify unauthorized transactions: Note any trades you did not authorize or were not informed about before execution
- Consult a securities attorney: Schedule a consultation to discuss your case and potential recovery options
California Investors: Local Representation Matters
Varnavides Law, PC is based in Los Angeles and represents California investors in FINRA arbitration claims against Merrill Lynch and other broker-dealers. While FINRA arbitration can be conducted nationwide, having local representation provides advantages for California investors.
California’s securities laws, including the Corporate Securities Law of 1968, provide additional protections for investors that may strengthen your claim. Our familiarity with California securities regulations and local business practices helps build stronger cases for our California clients. We also represent investors with claims against other major broker-dealers including Morgan Stanley, UBS, and Wells Fargo Advisors.
Frequently Asked Questions About Merrill Lynch Investment Losses
How long do I have to file a claim against Merrill Lynch for my investment losses?
Under FINRA Rule 12206, you have 6 years from the event giving rise to your claim to file for arbitration. However, state statutes of limitations may apply and could be shorter. In California, certain securities fraud claims must be filed within 3 years. Consult a securities attorney promptly to ensure you do not miss applicable deadlines.
What is FINRA arbitration and why is it required for Merrill Lynch disputes?
FINRA arbitration is a dispute resolution process administered by the Financial Industry Regulatory Authority. When you opened your Merrill Lynch account, you signed an agreement requiring disputes to be resolved through arbitration rather than court litigation. This process typically takes 12-16 months and results in a binding decision from neutral arbitrators.
How much does it cost to pursue a FINRA arbitration claim against Merrill Lynch?
We handle most investment loss cases on a contingency fee basis, meaning you pay no upfront attorney fees. We only get paid if we recover money for you. The fee percentage is discussed during your free consultation. You remain responsible for case costs such as filing fees, expert witnesses, and deposition transcripts, which can be discussed during your consultation.
What types of evidence do I need to prove my Merrill Lynch claim?
Helpful evidence includes account statements, trade confirmations, written correspondence with your broker, new account documents showing your investment objectives, marketing materials provided by your broker, and any notes from conversations. Your attorney can also obtain additional documents through the FINRA discovery process.
Can I sue Merrill Lynch in court instead of going through FINRA arbitration?
In most cases, no. The arbitration clause in your account agreement requires disputes to be resolved through FINRA arbitration. However, certain claims may be exempt, and class action waivers may not apply in some circumstances. A securities attorney can review your specific situation and advise on available legal options.
What is the difference between churning and unsuitable investments?
Churning refers to excessive trading in your account designed to generate commissions for the broker rather than benefit your portfolio. Unsuitable investments occur when a broker recommends products that do not match your investment profile, risk tolerance, or financial goals. Both violations can result in recoverable investment losses and may appear together in the same case.
How do I know if my broker engaged in unauthorized trading?
Review your account statements for trades you do not remember authorizing. In a nondiscretionary account, your broker must obtain your permission before executing each trade. Signs of unauthorized trading include trades you were not informed about, investments you did not agree to purchase, and account activity during periods when you were unreachable.
What happens if Merrill Lynch refuses to pay a FINRA arbitration award?
FINRA rules require broker-dealers to pay arbitration awards within 30 days. Failure to pay can result in the firm’s suspension or expulsion from FINRA membership, effectively preventing them from operating in the securities industry. As a major broker-dealer, Merrill Lynch consistently pays arbitration awards to maintain its regulatory standing.
Take Action to Recover Your Merrill Lynch Investment Losses
Merrill Lynch’s extensive regulatory history and substantial settlement record demonstrate that investors can successfully recover losses caused by broker misconduct. Whether your losses stem from churning, unsuitable investments, unauthorized trading, or outright fraud, you may have legal options through FINRA arbitration.
Time limits apply to investment loss claims. The sooner you consult with a securities attorney, the more options may be available for your case. Do not let Merrill Lynch’s legal resources intimidate you from pursuing the recovery you deserve.
Schedule Your Free Consultation
Contact Varnavides Law, PC to discuss your Merrill Lynch investment losses. Attorney Gary Varnavides brings 10 years of defense-side experience to fight for investors harmed by broker misconduct. We handle most cases on contingency, so there are no upfront attorney fees.
