Securities Attorney Dan Broxup of Mika Meyers, PLC Files $500,000 Group Claim Against Merrill Lynch Relating to Excessive Concentration

A group of investors represented by Mika Meyers, PLC have filed a complaint against Merrill Lynch alleging that Merrill Lynch advisor, Thomas Braley, unilaterally liquidated their safe, blue-chip investments and used the proceeds to concentrate their accounts in a handful of speculative energy- and industrial-sector stocks and Master Limited Partnerships. One of the accounts belonged to a charitable foundation that was established to help fund Boy Scout camps. The investors specifically allege that the handful of companies that Braley unilaterally selected for their portfolios were all involved in either commodity exploration/production or dry-bulk shipping of commodities, and that this overconcentration of the portfolios in two small areas of the market resulted in substantial losses when the energy-sector and the dry-bulk shipping industry hit the skids in 2014.

The chart below shows how one of the accounts at issue went from a 13% concentration in oil and gas and commodity shipping investments to a 63% concentration in such investments in less than a year. The investments declined more than 70% in value over the short time period they were held. The chart also identifies the stocks that were sold to fund the purchase of the oil and gas and commodity shipping investments, and how the returns on those investments compared to the investments that Braley replaced them with.

The investors allege that Braley’s management of their accounts was unsuitable based on their investment objective of “total return,” which according to Merrill Lynch’s definitions, is supposed to correspond to a “balanced” growth and income portfolio. The investors allege that Braley did the exact opposite of what they asked for: rather than balancing the accounts across a diverse group of asset classes and investments, he concentrated the account assets in two small areas of the market and in just a handful of securities, some of which were so obscure that they received no coverage from securities industry analysts.

If you have suffered losses as a result of over-concentration of your accounts, you may have claims against the financial advisor that recommended or selected the investments. Call Mika Meyers, PLC now for a free telephone consultation.