Call Now For a Free Consultation:
(614) 502-6165

Merrill Lynch Fined $7 Million by FINRA

Merrill Lynch, Pierce, Fenner & Smith Inc. has been fined $6.25 million, with an additional $780,000 to be paid in restitution, after the Financial Industry Regulatory Authority (FINRA) found that the firm inadequately supervised its customers’ use of leverage in their brokerage accounts. Merrill neither admitted nor denied the charges announced on Wednesday, November 30, but consented to the entry of these findings in settling the matter.

During its investigation, FINRA discovered that Merrill failed to adequately supervise their customer’s use of proceeds from loan management accounts (LMAs) between January of 2010 and November of 2014. These accounts are lines of credit which allow Merrill customers to borrow money and use the securities in their brokerage accounts as collateral for the loans.

FINRA discovered that both the Merrill Lynch policy and the terms of the loan agreements prohibited customers from using LMA proceeds to buy certain types of securities, but the firm’s supervisory system and procedures were not reasonably designed to enforce the policy. During that nearly five year period, FINRA found that Merrill brokerage accounts bought hundreds of millions of dollars’ worth of securities within two weeks of receiving LMA proceeds on thousands of occasions. As a result of the FINRA case, Merrill Lynch said that they have strengthened their controls and procedures related to the LMAs.

In addition, FINRA also found that between January of 2010 and July of 2013, the firm lacked adequate procedures and supervisory systems to make sure that transactions involving certain Puerto Rican securities, including closed-end funds and municipal bonds, were suitable.

Meyer Wilson has helped clients recover hundreds of millions of dollars in settlements and verdicts since we first opened our doors nearly 20 years ago, and are dedicated to providing victims of investment misconduct the legal representation they require in their time of need. Fill out our online form to request a free case evaluation, or call us at one of our office locations to speak with a member of our firm today.

Related Posts:

The information contained in The Firm’s posts on its blog, fraud alerts, investigations or elsewhere on the site is based upon information obtained from other sources including, but not limited to, news outlets and federal, state, and regulatory agency filings. All suspects and subjects of postings herein are presumed innocent until proven guilty in a court of law or administrative action and any and all crimes are alleged until a court or regulatory agency finds otherwise .

Share This Story
If you found the information provided by this article useful, consider sharing to your social media channels to help others in their search for reliable resources.
Consult with Our Legal Team
There is never a cost associated with a consultation
Columbus Office

614-224-6000
305 W. Nationwide Blvd
Columbus, OH 43215
Meyer Wilson
New Orleans Office

900 Camp Street 
Suite 337
New Orleans, LA 70130
Los Angeles Office

310-905-8688
2029 Century Park East,
Suite 400N
Los Angeles, CA 90067
Cleveland Office

216-600-1355
4781 Richmond Rd.
Suite 400
Warrensville Heights, OH 44128
Bloomfield Hills Office

248-817-8214
41000 Woodward Ave.,
Suite 350
Bloomfield Hills, MI 48304
Quick Links
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter. No recipients of content from this site, clients or otherwise, should act or refrain from acting on the basis of any content included in the site without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the recipient's state. Read More
The information contained in this Website is provided for informational purposes only, and should not be construed as legal advice on any subject matter.
Read More
chevron-down linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram