Merrill Lynch Finds itself in Trouble with the FINRA, Again
Since the beginning of June, Bank of America’s (NYSE:BAC) Merrill Lynch has been fined twice by the Financial Industry Regulatory Authority, or FINRA.
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For failing to file, or to file in a timely fashion, more than 650 required reports, including 300 customer complaints and updated broker information, the brokerage received its most recent fine of $500,000 on Monday.
According to the FINRA, the violations occurred between 2005 and 2011 and went undetected for several years. They may have impeded investors’ ability to assess certain brokers through the FINRA’s disclosure program and prevented firms from adequate background checks on new employees. The violations may even have kept FINRA from investigating certain events, said the regulator.
Under FINRA rules, a brokerage firm is required to provide updated information on its brokers, regarding any criminal and civil complaints, as well as any regulatory action taken against them.
Last June, the FINRA penalized Merrill Lynch $2.8 million for a different supervisory failure. The brokerage overcharged approximately 95,000 clients unnecessary fees because the brokerage did not have the proper system in place to check whether customers were charged in accordance to their contracts. As a result, clients were charged $32 million in unwarranted fees.
The incident is neither unique to Merrill Lynch or to many other large brokerages. In the past few months, similar units at Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), Wells Fargo (NYSE:WFC), and Citigroup (NYSE:C) were penalized for various infractions.
Merrill Lynch has neither admitted nor denied the charges brought by the FINRA.
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