A FINRA arbitration panel held Merrill Lynch liable in the amount of $1,336,463 for misconduct regarding the sale of securities to a retired couple. In July 2008, broker Miles Pure recommended that his customers, Mr. and Mrs. Billings, invest in Fannie Mae bonds and preferred stock, Merrill advertised the stock as a “safe” investment that was suitable for retirees seeking fixed income. Merrill further represented that the US Government “stands behind” Fannie Mae.
Merrill had downgraded its own rating of Fannie Mae stock to “High Volatility Risk Rating” 5 months before advising the Billings to purchase the Fannie Mae preferred stock. The timing of Merrill’s recommendation came just prior to the US Government’s decision to put Fannie Mae into conservatorship which ended preferred dividend payments to holders of Fannie Mae preferred stock.
At the time of the events in question, several financial rating services also downgraded Fannie Mae stock and media outlets detailed Fannie Mae’s inability to remain financially sound during the impending financial crisis.
The financial crisis, however, was irrelevant to the cause of damages in this case. These financial damages arose because Merrill presented the Fannie Mae bonds and stock to Mr. and Mrs. Billings as a secure and reliable investment.
Merrill also falsely promised the Billings would not be charged a commission on the purchase.
Merrill Lynch and other brokerage firms have sold billions of dollars worth of Fannie Mae preferred stock to investors, including retirees seeking quality, safe and predictable income producing investments.
If you have incurred financial losses through investments in Fannie Mae bonds or preferred stock, contact Wittenberg Law at (310) 295-2010 to discuss the facts and circumstances regarding your investment.