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Former Merrill FAs Detail Firm’s Restrictions on International Business

An amended class action complaint filed last week, saying Merrill Lynch misrepresented its commitment to U.S. advisors of international clients, expands on the firm's policy restrictions, including a lengthy list of "no-service" countries and a ban on international business trips for advisors.

Three financial advisors filed an amended complaint in a class action lawsuit against Merrill Lynch that details the firm's policies for international clients, policies these advisors claim hurts their business. The policies include restrictions on international travel and a reduction in the number of countries in which they can do business, according to the new complaint.

Former Merrill Lynch advisors Graciela and Jorge Perez and Miguel Sosa, all based in Miami, filed the class action suit in April in the United States District Court for the Western District of North Carolina. The original complaint alleges Merrill fraudulently misrepresented its commitment to the domestic advisors of non-citizen clients. The new complaint, filed last week, includes more information about the changes the firm made to its international business. 

In August 2012, the firm announced it would sell its international business to Julius Baer, but that included only 400 advisors located outside of the U.S. Not part of the sale were 300 financial advisors at various international hubs in the U.S., including the three plaintiffs. Graciela and Jorge primarily serve clients in Spain and Costa Rica, while Sosa’s clients are primarily from Spain and the Caribbean.

The lawsuit claims that despite plans to restrict its international financial advisory business, Bank of America CEO Brian Moynihan told advisors and clients that the firm was committed to this business.

“Merrill Lynch made these representations at a time when it knew that the changes

it would make to the international business would jeopardize Class Members’ relationships with these clients – and in some cases eliminate the business relationships entirely,” the amended complaint said. Merrill Lynch denies all the allegations, a spokesman said.

The amended complaint claims policy changes the firm made in 2015 and 2016 had a disparate impact on employees and severely hampered their ability to grow their international business. 

According to the complaint, Merrill completely shut down its international wealth business in more than 50 countries that it deemed “no-service countries” where advisors are prohibited from doing business. Other countries were labeled “limited-coverage;” advisors were prohibited from traveling to these countries to see clients or prospect new business.

One-third of the firm’s international business was categorized as “core,” but there were also restrictions put in place there, the complaint alleges. The firm instituted a $2.5 million minimum for new clients in these countries; existing clients are required to have at least $1 million in assets. Canadian clients must have at least $5 million with the firm.

Earlier this year, the firm made a change requiring international clients to physically visit the U.S. in 2016 to meet face-to-face with their advisor, or else their relationship would be terminated in January 2017, according to the complaint.

Other new requirements outlined in the complaint include an annual assessment that advisors have to complete, as well as getting clients to fill out documents testifying to their compliance with tax and currency laws in their home countries, as well as mutual funds held outside their home countries, the complaint says.

The firm also instituted a new requirements for U.S. clients living abroad. Advisors can only serve expats in approved countries and only for those with at least $1 million in assets with the firm. In addition, the firm will only serve the expat if they’re in another country for employment reasons, and the client must return to the U.S. permanently within three years of becoming a client, the complaint alleges. 

“Based upon the various policy changes, many financial advisors were forced to leave Merrill Lynch in order to preserve and service their international business and clientele,” the amended complaint said. “Such departing financial advisors were damaged through the loss of business, loss of opportunity, loss of unvested deferred compensation, paying back promissory notes prior to expiration of the term, emotional distress and other harms.”

“We have denied and continue to deny these allegations from this case brought early this year and have already asked the court to dismiss it,” said William Halldin, Merrill Lynch spokesman, in a statement.

Graciela and Jorge are now with Bolton Global Capital, and Sosa is with Global Investor Services, both independent firms focused on international business.  


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