(Bloomberg) Bank of America's Merrill Lynch unit was fined $12.5 million to settle allegations that the broker’s ineffective controls led to multiple orders being sent to markets, resulting in mini-flash crashes.
The bank set its internal trading limits too high, so they were ineffective and caused market disruptions on at least 15 occasions from late 2012 to mid-2014, according to the SEC. They included 99% drops in the stocks of Anadarko Petroleum on May 17, 2013, and Qualys on April 25, 2013, according to the statement.
Another order led to a drop of almost 3% in Google’s stock in less than a second on April 22, 2013.
“Despite multiple red flags, Merrill Lynch failed to evaluate adequately whether its controls were reasonably designed and failed to fix the problems quickly,” Robert Cohen, co-head of the market abuse unit at the SEC’s division of enforcement, said in a statement.
-
These investment advisories paid the price for passing along performance data faked by a third-party manager.
August 26 -
Massachusetts’ securities regulator tells the robo adviser to change its client communications policy by the end of September.
September 21
The fine is the largest ever by the agency for violations of the market access rule, which governs brokers’ risk-management controls. Bank of America agreed to the SEC’s order without admitting or denying the findings.
“We continue to enhance our programs with new technologies and controls,” said Bill Halldin, a spokesman for Bank of America. “Given that erroneous trades were canceled by the relevant exchanges in most instances, we are not aware of any client who was harmed as a result.”
