The regulator announced Thursday it fined the Merrill unit for “supervisory failures” and “for failing to provide certain required trade notices.” Merrill has provided $32 million in remediation, plus interest, to the affected customers.
"Investors must be able to trust that the fees charged by their securities firm are, in fact, correct. When this is not the case, investor confidence is threatened,” said Brad Bennett, FINRA's executive vice president and chief of enforcement
According to FINRA, Merrill failed to provide adequate supervisory system from April 2003 to December 2011 to ensure customers in certain investment advisory programs were billed in accordance with contract and disclosure documents. As a result, FINRA alleged that Merrill overcharged nearly 95,000 customer accounts fees of more than $32 million.
FINRA also alleged that Merrill also failed to provide timely trade confirmations to customers in certain advisory programs due to computer programming errors. As a result, from July 2006 to November 2010, Merrill failed to send customers trade confirmations for more than 10.6 million trades in over 230,000 customer accounts.
In addition, FINRA alleged that Merrill failed to properly identify whether it acted as an agent or principal on trade confirmations and account statements relating to at least 7.5 million mutual fund purchase transactions. At various times, Merrill Lynch also failed to deliver certain proxy and voting materials, margin risk disclosure statements and business continuity plans.
Merrill neither admitted nor denied the charges, but consented to FINRA's findings.
