--Finra fines Merrill Lynch $2.8 million for overcharging 95,000 customers
--Merrill pays $32 million in remediation
--A Merrill spokesman says the overcharges were related to improper coding of accounts
The Financial Industry Regulatory Authority has fined Bank of America Corp.'s (BAC) Merrill Lynch unit $2.8 million for overcharging nearly 95,000 customers $32 million in unwarranted fees, and for failing to provide certain required trade notices.
Merrill Lynch has provided $32 million in remediation, plus interest, to the affected customers. The broker-dealer and investment adviser neither admitted nor denied the charges but consented to the entry of Finra's findings.
"Following Bank of America's acquisition of Merrill Lynch, we identified operational issues that affected certain investment advisory accounts. These were primarily the results of improper coding of accounts," Merrill Lynch spokesman Bill Halldin said. "We have improved our system to address these issues and have reimbursed affected clients."
Finra found that from April 2003 to December 2011, Merrill Lynch failed to have an adequate supervisory system to ensure that customers in certain investment-advisory programs were billed in accordance with contract and disclosure documents. The regulator also said Merrill Lynch failed to provide timely trade confirmations to customers due to computer-programming errors, leading to a failure to send customers trade confirmations for more than 10.6 million trades in over 230,000 customer accounts from July 2006 to November 2010.
"Investors must be able to trust that the fees charged by their securities firm are, in fact, correct. When this is not the case, investor confidence is threatened," Finra Chief of Enforcement Brad Bennett said.
In addition, Finra said the broker-dealer and investment adviser didn't properly identify whether it acted as an agent or principal on trade confirmations and account statements relating to at least 7.5 million mutual-fund purchase transactions.
In October of last year, Finra fined Merrill Lynch $1 million for supervisory failures that allowed a registered representative, Bruce Hammonds, to allegedly convince 11 individuals to invest more than $1 million in a purported Ponzi scheme he allegedly created and ran as B&J Partnership for more than 10 months.
Bank of America shares were down seven cents to $8.07 in recent trading Thursday morning. Shares are up 45% year to date but are down 26% over the last 12 months.
Write to Saabira Chaudhuri at firstname.lastname@example.org