Merrill, BofA Fined $12M for Suspicious Activity Report Failures

The U.S. Securities and Exchange Commission revealed Tuesday that it has charged Merrill Lynch and its parent company, Bank of America, with failing to file hundreds of suspicious activity reports from 2009 to late 2019.

Merrill Lynch has agreed to pay a $6 million penalty to settle the SEC charges, according to statement released by the regulator, while in a parallel action, Merrill agreed to pay a separate $6 million fine to settle allegations brought by the Financial Industry Regulatory Authority.

“Following an internal review, we reported this matter to regulators and have enhanced our process and training regarding these filings,” a Bank of America representative said in a statement.

According to the SEC’s order, the Bank of America parent organization assumed responsibility for creating and implementing Merrill Lynch’s suspicious activity reporting policies and procedures, and for filing Merrill Lynch’s reports.

Over the course of a decade, the SEC alleges, the company improperly used a $25,000 threshold instead of the required $5,000 threshold for reporting suspicious transactions or attempted transactions where a suspect may have been seeking to use Merrill Lynch to facilitate criminal activity and could not be identified.

As a result, the SEC’s order states, Bank of America caused Merrill Lynch’s failure to file hundreds of required SARs.

Specifically, the SEC’s order finds that Merrill Lynch violated the books and records provisions of Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-8 thereunder, and that the Bank of America parent company caused those violations.

Without admitting or denying the SEC’s findings, both firms have agreed to cease and desist from committing or causing violations of those provisions, and Merrill Lynch also agreed to a censure and the $6 million civil penalty.

Photo: Shutterstock