Merrill Lynch Slapped with $3.7 Million Bill for Unsuitable Private Equity Recommendations: Oopsie Daisy!

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🚨Alert!🚨 Merrill Lynch has been ordered to cough up a whopping $3.7 million in damages and other costs after arbitrators sided against the wealth management firm following a private equity complaint. Ouch!

Two customers, Qun He and Haihui Zhang, filed a complaint against Merrill, Bank of America’s wealth management division, in late 2023, accusing the firm of violating securities laws, industry standards, and its fiduciary duty. They also claimed the firm acted with negligence and negligent supervision and breached its contract related to various unspecified securities. Merrill Lynch denied the allegations, but the U.S. Financial Industry Regulatory Authority (FINRA) made an independent arbitration forum available, and a public panel of arbitrators decided Merrill Lynch should pay the claimants $2.73 million in compensatory damages, $2,002 in costs, and $954,634 in attorneys’ fees.

Michael Bixby, a Florida attorney who represented the two customers, tells AdvisorHub that a broker recommended investments in illiquid proprietary feeder funds sold by Merrill. Bixby says that the feeder funds pooled capital into private equity investments overseen by institutional investors such as Apollo Global Management, KKR, and Blackstone. The lawyer says the recommended funds were advertised as having potential annual returns of 15% to 20%, but ended up recording annual returns around 3% after subtracting private equity fees and administrative charges from Merrill.

“We’re pleased with the result, and we think it reflects the arbitrator’s decision that Merrill was responsible for misconduct and held them accountable.” 

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2025-07-15 23:01