Podcast Center
Video Center
Webcasts
Resource Center
Events
By 
June 12, 2018 at 03:15 PM
Merrill Lynch agreed Tuesday to pay the Securities and Exchange Commission more than $15 million to settle charges that its employees misled customers into overpaying for residential mortgage-backed securities.
Merrill agreed to repay more than $10.5 million to its customers and to pay penalties of approximately $5.2 million.
The SEC found that Merrill Lynch traders and salespeople persuaded the bank’s customers to overpay for RMBS by deceiving them about the price Merrill paid to acquire the securities.
Merrill’s RMBS traders and salespeople “illegally profited from excessive, undisclosed commissions — called ‘markups’ — which in some cases were more than twice the amount the customers should have paid,” the SEC said.
Merrill also failed to have compliance and surveillance procedures in place that were reasonably designed to prevent and detect the misconduct that increased the firm’s profits on RMBS transactions to the detriment of its customers.
“In opaque RMBS markets, lying to customers about the acquisition price can deprive investors of important information,” said Daniel Michael, chief of the SEC Enforcement Division’s Complex Financial Instruments Unit, in a statement.
