La Jolla, CA asked in Securities Law and Stockbroker Fraud for California

Q: My question pertains to potential breach of fiduciary responsibility by my financial advisor, Merrill Lynch.

I have been a client of Merrill Lynch (ML) for more than 20 years. Not until 3 months ago did any of my advisors at ML ever mention that I should be purchasing US Govt issued iBonds, as part of my portfolio, which in almost every year of my ML relationship have paid a substantially higher return than that generated by ML. In essence, because ML makes no commission from the upfront sale of iBonds, nor any ongoing management fees, as these iBonds are held within a US Treasury account, outside of ML. Per my calculations, I can substantiate a more than $8M impact on my net worth as a result of ML's silence on this far safer and higher return investment over the term of my ML relationship. Per my ML advisor, ML claims this is not a breach of their fiduciary responsibility as its not a security they can sell. After more than 20 years with ML, they are now also requiring that I move my accounts to another firm. Is there a basis for a claim of breach of fiduciary responsibility?

2 Lawyer Answers
David Neuman
David Neuman
  • Securities Law Lawyer
  • Seattle, WA

A: California law finds that stockbrokers and financial advisors are per se fiduciaries to their clients. Thus, the fiduciary has to act in your best interest first. There are a number of other duties that arise when a stockbroker is a fiduciary, such as keeping their clients abreast on changes in the market. That may include moving into a defensive posture when the market shows signs of decline.

It is difficult to tell you whether you have a potential claim against Merrill Lynch without analyzing your account statements and comparing that to your investment objectives, risk tolerance, and other factors. I suggest that you find an attorney who specializes in suing brokerage firms like Merrill. To find such attorneys, you can visit, which is an organization of attorneys dedicated to the rights of investors.

I'd also be happy to answer further questions. Good luck!

Steve A. Buchwalter
Steve A. Buchwalter pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
  • Securities Law Lawyer
  • Encino, CA
  • Licensed in California

A: The advice Mr. Neuman gave is good advice. If I may add a couple of thoughts. 1. Merrill does sell iBonds. They're a low commissioned product so they may not recommend them much. 2. I doubt your damages are as high as you think as you cannot buy more than $10,000 in iBonds a year. 3. The fact that they asked you to move your account may mean that some of their advice wasn't the best.

As Mr. Neuman said, the only way to get a better idea is to have someone look at your statements.

Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.

The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.

Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.