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December 20, 2017 at 10:06 AM
A Miami court ruled in favor of a multimillion-dollar class action settlement against Merrill Lynch after two years of litigation.
Merrill Lynch must pay $25 million in a class action settlement brought by the trustees of two Miami-area retirement plans in a case filed in the U.S. District Court of the Southern District of Florida.
The plaintiffs — trustees for the LAAD Retirement Plans — asked a federal judge in the Southern District of Florida on Nov. 28 to grant final approval to the settlement. A fairness hearing was then held on Dec. 13, and the judge approved the settlement agreement on Dec. 18.
The suit was filed in 2015 on behalf of two LAAD plans that suspected Merrill’s $79 million refund to thousands of small business retirement customers — a portion of which resulted from a FINRA fine — was insufficient.
In June 2014, Merrill entered into a letter of acceptance, waiver and consent with the Financial Industry Regulatory Authority, in which Merrill acknowledged its failure to provide appropriate sales charge waivers for mutual fund purchases for certain charities and retirement accounts.
Typically, Class A shares of mutual funds have lower fees than Class B and C shares, but charge customers an initial sales charge. Many mutual funds waive their upfront sales charges for retirement accounts and some waive these charges for charities.
According to FINRA, at various times since at least January 2006, Merrill Lynch did not waive the sales charges for affected customers when it offered Class A shares. FINRA found that this resulted in approximately 41,000 small-business retirement plan accounts, and approximately 6,800 charities and 403(b) retirement accounts, either paying sales charges for Class A shares, or paying higher fees and expenses for other share classes.
