Finra hits Merrill for $450K over structured products sales

SRO claims brokerage did not have automated system to flag potential risk for clients

Jun 14, 2012 @ 4:56 pm

By Dan Jamieson

Merrill Lynch
+ Zoom
((Photo: Bloomberg News))

Merrill Lynch this week agreed to pay a $450,000 fine and accept a censure in a case involving supervision of structured-product sales.

In a settlement agreement dated Monday, the Financial Industry Regulatory Authority Inc. claims that from 2006 through March 2009, Merrill did not have an automated compliance reporting system to flag potentially unsuitable concentrations of structured products in customer accounts.

Merrill relies on such automated reports in its oversight system.

During the time period at issue, Finra said the firm's customers made 650,000 purchases of structured products. More than half of the products were issued by Merrill's parent company.

Because structured products are unsecured debt obligations of the issuing firm, customers face an "issuer risk," Finra said, which "underscores the importance of ensuring that customers invest only an appropriate amount of their assets in such products."

In a statement included with settlement, Merrill said it began developing an automated concentration report in late 2008, and implemented the system in March 2009.

Bill Halldin, a Merrill spokesman, declined further comment.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

Events

Ron Carson explains the origins of 'Ronsense'

To take his message to the masses, Ron Carson has launched a "Ronsense," a web series on Twitter that features some of his pearls of wisdom. Learn about how it all started.

Video Spotlight

The Search for Income

Sponsored by PGIM Investments

Recommended Video

Path to growth

Latest news & opinion

T. Rowe Price steps up its game to serve financial advisers

The Baltimore-based mutual fund giant is more aggressively targeting financial advisers with a beefed-up wholesale crew and placement on custodial platforms.

The most important tax changes for 2018

The Internal Revenue Service issued inflation adjustments to more than 50 tax provisions for 2018.

E*Trade acquiring custodian Trust Company of America

Discount broker buying second-tier custodian for $275 million.

Another thousand Dow points higher, and investors yawn

Market milestones keep falling like dominoes, with 51 records broken so far this year.

LPL retains $570 million with super-OSJ deal

Kansas-based nVision Wealth will come under supervision of Chicago-based IHT Wealth Management.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print