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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. Many investors did not adequately understand or comprehend the risks associated with Market-Linked Notes or how they worked. In many instances, Market-Linked Note investments tracked oil prices, energy pipelines, or commodity baskets and have resulted in significant investor losses.

How Do Market-Linked Notes Work?

Merrill Lynch managed 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. In many instances Market-Linked Notes offered little if any principal protection. Merrill Lynch financial advisors recommended and/or solicited investments based on the potential 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 may have substantial fees and/or commissions paid to affiliated companies for banking, underwriting and asset management. Merrill Lynch may have failed to properly explain the risks associated with Market-Linked Notes which 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 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. 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.

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®

If you are an investor that lost more than $100,000 in Merrill Lynch Market-Linked Notes you should consider all legal options. If you wish to discuss your particular situation and the potential for the recovery of your investment losses, or you have information concerning Merrill Lynch Market-Linked Notes, please contact us for an evaluation of your potential case.

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