The Blog Of The Securities Industry Professional Association

Merrill Lynch Rules

FINRA Fines Merrill one day of interest for five years of violations

Today FINRA announced that they have fined Merrill Lynch $500, 000 for five years worth of violations related to their failure to timely update broker and firm records to reflect customer complaints and arbitrations.

In the Merrill Lynch case, FINRA found that:

  • From 2007 to 2011, Merrill Lynch failed to file or timely file more than 650 required reports, including customer complaints and customer settlements.


  • From 2005 to 2011, Merrill Lynch failed to report or timely report customer complaints, and related Forms U4 and Forms U5 between 23 percent and 63 percent of the time.


This appears to be pretty egregious by any standard but the most important fact that is left out of the entire action is that nobody from Merrill was named for failure to supervise.  Not that we are clamoring for Failure to Supervise penalties but had this been a small Broker dealer that forgot to update the Firm’s form B/D or their Broker’s form U-4 we would be reading about multiple fines and penalties and certainly suspensions would be handed out and careers would be ruined.   Instead its business as usual for the big guys on Wall Street: Pay a big fine and nobody gets hurt!

We think it’s ironic that at a time when the current President is inflicting class warfare on the American population the real culprits are secretly snickering at the fact that crime does pay on Wall Street.   What this settlement tells the American investor is that the largest firms will continue to inflict harm on the general public and if they are caught after 5 years they will have to fork over one day of interest from their cash holdings.  $500k to Merrill is probably what they will spend today for their company’s private jets but we are to sit here and believe this is another sign that Wall Street reform in the Dodd-Frank wedding dress is going to save us all?   Click here to read the full release

How much did this enforcement hurt Merrill? Well, its about 1/20th of what they lost trading some bad options last week!  Just when you think it can’t get any worse Merrill and BAC announced a 10 million loss from some trade errors, but were supposed to believe a 500k fine for 5 years of violations is going to scare them into future compliance?  Strange days indeed.

Click here to read about the 10 million trading loss

Post Metadata

September 24th, 2012


Comments are closed.