Tuesday, April 16, 2013

Merrill Lynch fined more than $1M over securities trading

A regulator fined Merrill Lynch $1.05 million Tuesday for not making sure customers got the best prices in transactions involving a type of security.

The Financial Industry Regulatory Authority, an independent regulator for securities firms doing business in the U.S., also said Merrill Lynch, which is part of Bank of America, has been ordered to pay more than $323,000 in restitution, plus interest, to affected the clients as part of the settlement.

FINRA said it found that Merrill's computer programming for nonconvertible preferred securities was flawed and led to prices being quoted from only primary listing exchanges, omitting better market prices listed on other exchanges. Merrill made 12,259 such flawed transactions, according to FINRA.

"This matter was caused by a processing issue that has been corrected, and we are compensating affected clients," Merrill spokesman Bill Halldin said Tuesday.

It's not the first FINRA fine against Merrill.

In September, it was fined $500,000 for failing to file more than 650 reports, including consumer complaints, criminal complaints and settlements. In June, it was fined $2.8 million and paid $32 million in restitution to settle claims that it overcharged tens of thousands of customers from 2003 to 2011. In January 2012, it was fined $1 million over claims it failed to mediate disputes with employees over bonuses.

Bank of America bought Merrill in January 2009 in a deal that became highly criticized by shareholders who said Merrill's deteriorating financial held was concealed from them. This month, a federal judge approved a $2.42 billion cash deal to settle shareholder claims that the bank misled investors in the Merrill purchase.