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May 04, 2023 at 02:40 PM
What You Need to Know
- Advisor trainees called numbers on do-not-call lists, according to New Hampshire regulators and FINRA.
- Merrill ditched cold calling and revamped its advisor training program in 2021.
Merrill Lynch agreed to pay a total of $1.4 million to the Financial Industry Regulatory Authority and New Hampshire Bureau of Securities Regulation to settle allegations that its advisor trainees made telemarketing calls to phone numbers on the national do-not-call registry and Merrill’s own do-not-call lists.
Without admitting or denying the New Hampshire bureau’s findings, Merrill agreed to pay administrative penalties of $650,000 and an additional $50,000 for the state’s investigation, totaling $700,000 in penalties, according to a news release Wednesday and a consent order published by the regulator.
The calls under investigation took place in 2018 and 2020. Before the pandemic, Merrill’s trainees were expected to contact at least 45 prospects a week, meet with six and have some $12 million in assets by the end of their training program, according to Business Insider.
Merrill revamped its training program in 2021, ditching cold calls in favor of internal referrals and social media outreach and shifting its focus toward coaching and away from sales.
The New Hampshire bureau noted that Merrill had reached a $400,000 settlement with it 2014 over alleged calls by its representatives to New Hampshire residents on a do-not-call list.
“New Hampshire has the highest number of active registrations per capita on the National Do Not Call Registry with 1,296,000 active registrations,” the bureau said Wednesday.
The bureau started an investigation into the latest Merrill violations in 2022 and examined telemarketing calls placed by trainees in the wirehouse’s Financial Advisor Development Program, according to the Bureau.
FADP reps allegedly placed telemarketing calls to develop their books of business. After examining FADP calls made in 2019 and 2020, the bureau determined that Merrill’s FADPs and supervisors “did not engage in proper phone number screening prior to making the calls, violating the firm’s policies and procedures.” However, “when the violations were discovered, Merrill Lynch took disciplinary action against the offending agents and supervisors,” the bureau said.
Merrill also instituted additional measures designed to improve the detection of unlawful agent telemarketing activities, according to the bureau.
