Merrill Lynch Loses Arbitration Alleging It Failed To Hedge Concentrated Stock Holding

Arbitrators awarded damages to a Merrill Lynch customer who had amassed a concentrated position in Dell Computer after he had sold his company to Dell. The Merrill broker allegedly promised to protect the stock from downward price movements by way of various hedging techniques, such as "collaring" the stock. However, no hedging occurred, even after the stock became unrestricted.

Source: NASD Arbitration