Merrill Lynch was ordered by the New Hampshire Bureau of Securities Regulation to pay $26.25 million to settle claims that it failed to adequately supervise a former broker who violated securities rules by, among other things, allegedly trading without authorization in a client’s brokerage accounts.
The amount is the largest monetary sanction in the New Hampshire Bureau of Securities Regulation’s history, and included a fine of $1.75 million plus costs of $250,000, along with restitution of $24.25 million, according to a consent order filed Monday by the regulator.
Merrill was also ordered to maintain compliance undertakings specifically put in place to address the compliance failures uncovered by the Bureau’s investigation.
Commenting on the settlement, Merrill Lynch spokesman William Halldin told ThinkAdvisor: “We have enhanced our policies and monitoring systems over the last several years to more closely monitor certain types of client account activity.”
The former broker sanctioned, Charles Kenahan, was also permanently barred from the securities business in New Hampshire.
In addition to trading without authorization, he allegedly mismarked trade confirmations, excessively traded stocks and initial public offerings, overcharged commissions, and inappropriately traded inverse and leveraged products, according to the state regulators.
Kenahan’s “misconduct led to high commissions for Merrill Lynch and Kenahan and heavy losses for the investor,” the regulator said. He was terminated by Merrill in July 2019.