Merrill Lynch Pierce Fenner & Smith Inc. is facing a putative class-action lawsuit after a woman who opened three Merrill Edge brokerage accounts and a Bank of America Corp. checking account with about $1 million combined earned "paltry" yields.
According to the lawsuit, Sarah Valelly earned 0.14% in the Edge accounts and 0.06% in the checking account, well below the roughly 2% she could have earned in a money-market fund.
The complaint contends that Merrill's agreements with customers require it to pay a "reasonable rate" on cash in retirement accounts, which would be closer to the 2% money-market rates. It accuses the company of hiding disclosure about sweep options in "redundant and voluminous" opening documents and of shifting cash from brokerage accounts without the "prior written affirmative consent," as required by the Securities and Exchange Commission, the Financial Industry Regulatory Authority and the New York Stock Exchange.
"Merrill Lynch disputes the allegations in the complaint and intends to vigorously defend the case," a spokesman said in an email to S&P Global Market Intelligence.
