Merrill fined $2.5 million for supervision violations in Massachusetts

Training session did not include discussion of fiduciary requirements when commission-based assets are moved to fee-based accounts
MAY 26, 2015
Secretary of the Commonwealth of Massachusetts William Galvin fined Merrill Lynch $2.5 million for supervisory violations in connection with a training presentation in 2013. Mr. Galvin, whose office oversees securities regulation in the state, said that during the presentation, Merrill financial advisers were being trained in how to double their production by, among other things, transferring existing customer assets from commission-based brokerage accounts to fiduciary fee-based alternatives. (More: Galvin expands investigation of Schorsch empire) Mr. Galvin's order states that this part of the presentation “did not include language regarding client suitability or the fiduciary requirements of Merrill Lynch financial advisers.” “Financial advisers may have been encouraged to move their clients' assets based on their own financial interest rather than their clients' best interest,” Mr. Galvin said in a news release. Mr. Galvin noted that the presentation, which was attended by more than 300 Merrill staff in Boston, including financial advisers, was not reviewed ahead of time by Merrill compliance personnel, in violation of the firm's policy. (More: Merrill Lynch fined over rogue broker) “Compliance rules and procedures are essential to the integrity of the marketplace, but they are rendered meaningless unless they are rigidly adhered to and address all possible interpretation or misinterpretation by the intended audience,” he said. “We are reiterating to our employees the need to have internal presentations properly approved before their use,” said William Halldin, Merrill Lynch spokesman. “Importantly, as the state notes, this was not a matter involving any conduct that disadvantaged our clients.”

Latest News

Northern Trust names new West Region president for wealth
Northern Trust names new West Region president for wealth

The new regional leader brings nearly 25 years of experience as the firm seeks to tap a complex and evolving market.

Capital Group extends retirement plan services further with a focus on advisors
Capital Group extends retirement plan services further with a focus on advisors

The latest updates to its recordkeeping platform, including a solution originally developed for one large 20,000-advisor client, take aim at the small to medium-sized business space.

Why RIAs are the next growth frontier for annuities
Why RIAs are the next growth frontier for annuities

David Lau, founder and CEO of DPL Financial Partners, explains how the RIA boom and product innovation has fueled a slow-burn growth story in annuities.

Supreme Court slaps down challenge to IRS summons for Coinbase user data
Supreme Court slaps down challenge to IRS summons for Coinbase user data

Crypto investor argues the federal agency's probe, upheld by a federal appeals court, would "strip millions of Americans of meaningful privacy protections."

Houston-based RIA Americana Partners adds $1B+ with former Morgan Stanley director
Houston-based RIA Americana Partners adds $1B+ with former Morgan Stanley director

Meanwhile in Chicago, the wirehouse also lost another $454 million team as a group of defectors moved to Wells Fargo.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.