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March 23, 2015 at 11:13 AM
Massachusetts regulators required Merrill Lynch (BAC) to pay a $2.5 million fine after the brokerage firm failed to supervise internal presentations made during meetings of over 300 financial advisors and other staff in Boston.
The talks, which were not pre-approved by compliance staff, focused on Optimal Practice Model (OPM) Tools and took place in early 2013. In addition to advisors, Merrill Lynch executives, directors and senior vice presidents were present.
The Secretary of the Commonwealth’s order states that the presentations included information on how to “(d)ouble (p)roduction” ‘by’… “among other things, transfer of existing customer assets from commission-based brokerage accounts, to fiduciary fee based alternatives.”
The regulators add that the presentation “did not include language regarding client suitability or the fiduciary requirements of Merrill Lynch financial advisors.”
The state regulators, thus, stepped in to address the associated risks.
“Merrill may have on the books stringent rules on adhering to regulatory duties and obligations but by not discussing them explicitly in this presentation on ‘doubling production,’ Merrill created a risk the attendees could have been misinterpreted the double production presentation included in the OPM Tools Presentations,” said Secretary of the Commonwealth William Galvin, in a press release
