Boston, MA 06/17/2014 (wallstreetpr) – According to a news, Merrill Lynch unit of Bank of America Corp. (NYSE:BAC) has overcharged around 47,000 charities and retirement accounts which invested in it; hence it has been fined $8 million. Other than this amount, it will also reimburse the amount of $24.4 million to settle the allegations put by the customers in regard with overcharging their mutual funds.
According to a statement given by FINRA (Financial Industry Regulatory Authority), the current reimbursement amount and fines are in addition to the sum of $64.8 million which the company has already repaid to all the investors. The total payout made by Merrill Lynch in regard with overcharging issue touches $97.2 million including the fine. Arguably Merrill offered all three classes of mutual funds shares i.e. class A, class B, class C. Among all the three classes, class A shares carry lower fees than class B, and class C but at the same time they carry upfront sales charges.
What was the issue:
FINRA said in a statement that Merrill was not successful in providing sales charge waivers on N number of retirement accounts for as long as five year’s period, starting in year 2006. As a result of this irresponsible behavior of Merrill, 6,800 403(b) retirement plan accounts of ministers and public school employees, charities and 41,000 small business retirement plans ended up paying higher than required charges on class A shares or subscribed to those shares that had higher fees than normal shares.
According to settlement reports, around 16,200 accounts out of the total mentioned above will get a share in $24.4 million payout.
Merrill refused to comment on the decision, and it neither accepted nor denied the charges levied by FINRA. Bill Halldin, a spokesperson, said, “Merrill had informed FINRA and started making repayments to all the victims voluntarily as soon as it was brought into lights.”
