Merrill Lynch agreed to pay about $6 million in fines and disgorgement for improper sales of shares from initial public offerings to industry insiders over the past eight years.
Pre-IPO stakes in Twitter, Facebook, LinkedIn and General Motors, for instance, were sold to Merrill Lynch employees’ immediate family members and some clients who were advisors at other firms, according to the Financial Industry Regulatory Authority.
From 2010 to March 2018, the FInancial Industry Regulatory Authority says, Merrill Lynch made over 1,450 prohibited sales of 325 different IPOs to nearly 150 client accounts in which advisors at other firms or family members of Merrill brokers held a beneficial interest. At least 120 financial advisors working at nearly 80 Merrill branch offices were involved in the prohibited IPO sales.
“IPO shares sold to industry insiders are unavailable to investors who might otherwise have purchased them … ,” according to Susan Schroeder, executive vice president for FINRA’s Department of Enforcement. “Merrill Lynch knew or should have known that these customers were restricted from IPO purchases, but repeatedly sold them shares in violation of FINRA rules.”