Merrill Lynch agrees to $500K fine for filing failures

Bank of America Merrill Lynch has agreed to pay $500,000 to settle allegations that it failed to file about 1,200 reports or other documents about customer complaints, arbitration claims, broker registration and broker terminations between 2005 and 2011, according to the Financial Industry Regulatory Authority Inc.
The brokerage either didn’t submit these filings or didn’t send them in fast enough, the self-regulator said Monday in announcing the settlement. Merrill Lynch neither admitted nor denied the allegations in agreeing to settle.
In about 300 of the cases over three years, Merrill Lynch failed to acknowledge client complaints, according to Finra. From 2007 through 2010, Merrill Lynch also failed to file U4 broker registration and U5 broker termination forms up to 79% of the time, Finra said.
“Merrill Lynch failed to report critical information that regulators and investors rely upon,” said Finra enforcement chief Brad Bennett. “Without timely and accurate reporting by firms, investors only have part of the picture when researching and making decisions about their brokers.”
The self-regulator said failure to file regulatory information on time can compromise the integrity of the CRD system, which tracks registration of securities firms and individuals, and BrokerCheck, the disclosure system Finra maintains about brokers.
The brokerage reported its regulatory lapses to Finra in November 2009 after having discovered the issues as part of its merger with Bank of America.
“As part of a review that began in 2009, Merrill Lynch identified instances where the firm had not made regulatory filings in a timely manner,” said Bill Halldin, a spokesman for Merrill Lynch. “We have enhanced our policies and procedures to address issues raised in this matter and to ensure that client complaints are properly reported.”
The settlement comes as Finra has said it wants to put requirements on brokers that may require firms to include a reference and a link to BrokerCheck on their company websites, and on certain sites maintained by individual representatives, as a way to expand consumers’ use of the system.