Merrill fined for allegedly overcharging customers by $32M

Merril: Cracked code

Brokerage agrees to pay nearly $3M fine to settle Finra enforcement action; 'improper coding' blamed

Bank of America Merrill Lynch will pay a $2.8 million fine for supervisory lapses that led to its overcharging customers by $32 million over eight years, Finra said Thursday.

Merrill already has repaid the 95,000 customers who were charged unwarranted fees due to computer coding issues from April 2003 through December 2011, according to the Financial Industry Regulatory Authority Inc. and the Bank of America Corp. unit.

“Investors must be able to trust that the fees charged by their securities firm are, in fact, correct,” said Brad Bennett, Finra’s enforcement chief. “When this is not the case, investor confidence is threatened.”

Merrill Lynch also failed to send 230,000 customers timely confirmations on 10.6 million trades from July 2006 through November 2010 and failed to identify its role in at least 7.5 million mutual fund transactions, according to the brokerage industry regulator.

“Following Bank of America’s acquisition of Merrill Lynch, we identified operational issues that affected certain investment advisory accounts,” said Bill Halldin, a Merrill Lynch spokesman. “These issues primarily were the result of improper coding of accounts.”

Bank of America brought these issues to Finra’s attention after its January 2009 acquisition of Merrill Lynch & Co. Inc., according to the Finra documents.

In addition to reimbursing the affected clients, the brokerage has improved its systems to address all the issues settled in this case, Mr. Halldin said.