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

Maryland bars advisor over charging excessive fees to clients
Maryland bars advisor over charging excessive fees to clients

Blue Anchor Capital Management and Pickett also purchased “highly aggressive and volatile” securities, according to the order.

Wave of SEC appointments signals regulatory shift with implications for financial advisors
Wave of SEC appointments signals regulatory shift with implications for financial advisors

Reshuffle provides strong indication of where the regulator's priorities now lie.

US insurers want to take a larger slice of the retirement market through the RIA channel
US insurers want to take a larger slice of the retirement market through the RIA channel

Goldman Sachs Asset Management report reveals sharpened focus on annuities.

Why DA Davidson's wealth vice chairman still follows his dad's investment advice
Why DA Davidson's wealth vice chairman still follows his dad's investment advice

Ahead of Father's Day, InvestmentNews speaks with Andrew Crowell.

401(k) participants seek advice, but few turn to financial advisors
401(k) participants seek advice, but few turn to financial advisors

Cerulli research finds nearly two-thirds of active retirement plan participants are unadvised, opening a potential engagement opportunity.

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.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave