The Financial Industry Regulatory Authority said Thursday that it fined Merrill Lynch (BAC) $2.8 million for supervisory failures that resulted in clients being overcharged $32 million in unwarranted fees from 2003 to 2011. As a result of this issue and for its failure to provide certain required trade notices, FINRA says, Merrill is paying $32 million in remediation, plus interest, to the affected clients.
“Investors must be able to trust that the fees charged by their securities firm are, in fact, correct,” said Brad Bennett, executive vice president and chief of enforcement for FINRA, in a press release. “When this is not the case, investor confidence is threatened.”
According to the settlement document, Merrill Lynch identified these problems of its own volition and “took remedial measures to correct its systems and procedures.” It neither admitted nor denied the charges but consented to the entry of FINRA’s findings.
“Following Bank of America’s acquisition of Merrill Lynch, we identified operational issues that affected certain investment advisory accounts,” said a Merrill spokesperson in a statement. “These issues primarily were the result of improper coding of accounts. We have improved our systems to address these issues and we have reimbursed affected clients.”
FINRA found that from April 2003 to December 2011, Merrill Lynch failed to have an adequate supervisory system to ensure that customers in certain investment advisory programs were billed in accordance with contract and disclosure documents. This led to overcharges affecting nearly 95,000 customer-account fees of more than $32 million.