Merrill Lynch

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Merrill Lynch

Merrill Lynch Market-Linked Notes

Merrill Lynch underwrites, manages and markets the sale of Market-Linked Notes issued by Bank of America and unaffiliated banks. Market-Linked Notes were recommended by Merrill Lynch financial advisors to customers as a stable source of income. Investors do not understand the risks associated with Market-Linked Notes and Merrill Lynch was responsible for providing a fair and balance representation of the risks associated with this investment. Most investors do not understand that the interest credited to their account is far more complex than a simple interest rate when it is based on a volatile security, commodity, index or currency. Market-Linked Notes investments that tracked, Oil Prices, Energy Pipelines, or Commodity Baskets resulted in significant losses.

How Do Market-Linked Notes Work?

Merrill Lynch manages Market-Linked Notes to generate greater returns through the use of embedded derivatives designed to track the performance of a volatile security, index, commodity or currency, many times without any principal protections. Merrill Lynch financial advisors solicit investments based on these potentially greater returns without properly disclosing the risks associated with Market-Linked Notes. Merrill Lynch provides incentives for the sale of proprietary products, such as Market-Linked Notes issued by affiliated banks. Market-Linked Notes have substantial fees and/or commissions paid to affiliated companies for banking, underwriting and asset management. Merrill Lynch failed to properly explain the risks associated with Market-Linked Notes whose performance and interest crediting is tied specific security, commodity, index or currency, sometimes with leverage up to 200%.

In June 2012, the Financial Industry Regulatory Authority (FINRA) censured and fined Merrill Lynch $450,000 for sales practice rule violations related to the sale of Structured Securities Products, referred to as Market-Linked Notes. According to FINRA’s findings in the Letter of Acceptance Wavier and Consent, more than 50% of the 650,000 Structured Securities Product transactions were issued by the parent of Merrill Lynch. Additionally, FINRA regulators found that there was inadequate supervision of customer accounts to determine whether there were unsuitable levels of concentration in Market-Linked Notes. Merrill Lynch may have failed to properly explain the risks associated with Market-Linked Notes whose performance and interest crediting is tied specific security, commodity, index or currency. Did you invest in Market Linked Notes designed to track the Price of Oil, MLP Pipelines, Commodities Baskets and Indexes, perhaps leveraged up to 200%?

Merrill Lynch underwrites, manages and markets to its customers billions of dollars in Market-Linked Notes including the following:

  • Bank of America – Autocallable Market-Linked Step Up Notes Linked to the S&P Oil & Gas Exploration and Production Select Industry Index
  • Bank of America – Strategic Return Notes
  • Bank of America – Accelerated Return Notes® Linked to the Merrill Lynch Commodity Index eXtra Precious Metals Plus – Excess Return
  • Credit Suisse – Accelerated Return Notes®
  • HSBC USA – Market Index Target Term Securities®
  • HSBC USA – Capped Leveraged Index Return Notes®

KlaymanToskes has represented investors in Financial Industry Regulatory Authority (FINRA) claims against Merrill Lynch with claims for FINRA sales practice violations related to the sales of structured securities products, also known as Market-Linked Notes. Our clients’ claims for damages relate to FINRA sales practice violations of misrepresentations and omissions of material facts, conflicts of interest, unsuitable investment advice, securities concentration and failure to supervise. Visit our FAQs to learn more about our process and get answers to frequently asked questions.

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