Finra slaps Bank of America Corp (NYSE:BAC)’ Merrill with $1 million fine

by Patrice Washington | Wednesday, Apr 17, 2013 | 528 views

Northern, WI 04/17/2013 (usastockreport) – Wall Street’s self regulator has fined Bank of America Corp (NYSE:BAC) (Closed: $12.28, Up by 2.50%)’s brokerage unit Merrill Lynch $ 1.05 million. The latter had overcharged customers who had been involved in the trading of non-convertible preferred securities. In a statement, Financial Industry Regulatory Authority said that the clients who had used ML BondMarket actioned trades at prices that were far lower than the best national bid. This was the result of faulty programming and between 2006- 2010, had occurred on 12,259 occasions. Restitution charges of $323,000 were also levied on the brokerage.

System-design priority
The head of marketing regulation for Finra, Thomas Gira said that adequate designing of broker-dealer systems has to be prioritized under all circumstances as this is the only way that customers can be assured of securities transactions at fair prices. He said that the issues in the Merrill Lynch systems led to several customers receiving prices that were unfair, for over four years. As per Finra’s complaint, the bond-trading platform that was used by Merrill Lynch was programmed in such a manner that trades that were fewer than 5,000 shares were automatically executed based on the quotes that were published.

The regulator said that the systems took only the prices on primary exchanges into account. In an email, a spokesperson for the Charlotte, North Carolina-based bank, William Halldin said that this matter had pre-dated the Merrill Lynch acquisition by Bank of America and been the result of a processing issue which had been rectified He also said that the affected clients have been compensated.

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