In Focus
January 17, 2003
he New York Times recently ran a story that caught my eye. It was entitled, "Court Rejects Tax Strategy Merrill Sold to Companies". I had to re-read that title - because "Merrill" actually stood for Merrill Lynch, and it sold a tax strategy! Not some mega accounting firm or law firm, but Merrill Lynch.
This confirmed the transition that I have noted in the previous years, that Merrill (and other major firms) is a full service financial firm, where the word "financial" is read broadly to include tax planning, insurance planning, estate planning, business consulting and so forth.
The headline also confirmed something else: that Merrill's tax strategy was rejected. Traditional brokerage firms, such as Merrill, are having all kinds of difficulties as they venture into new areas once reserved only for the most skilled accountants and attorneys. The courts' rejection of Merrill's tax strategy will cost its client (drug company Wyeth) $226 million in taxes. Other clients of Merrill already had paid their millions in taxes on the failed advice.
Firms formerly known as "brokerage firms", such as Merrill, may well find that their zealousness in marketing new services will result in legal liability.
— James J. Eccleston
FinancialCounsel.com
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