Bank of America to Pay $42 Million to Settle New York AG Probe in Electronic Trading

By Allison Prang

Bank of America Corp.'s Merrill Lynch will pay $42 million to the state of New York in connection with an investigation into the firm's electronic-trading activity.

New York Attorney General Eric Schneiderman said Friday that Merrill Lynch had secret agreements with certain firms, such as Madoff Securities and Citadel Securities, to send them clients' orders.

Those agreements were kept concealed from clients over a five-year period, a press release said.

Merrill Lynch applied its "masking" strategy to more than 16 million client orders between 2008 and 2013, representing over 4 billion traded shares, the New York attorney general's office said.

Mr. Schneiderman said the settlement was the "largest ever state recovery in connection with an electronic trading investigation."

"Bank of America Merrill Lynch went to astonishing lengths to defraud its own institutional clients about who was seeing and filling their orders, who was trading in its dark pool, and the capabilities of its electronic trading services," Mr. Schneiderman said in prepared remarks.

A Bank of America spokesman said the settlement "primarily relates to conduct that occurred as long as 10 years ago."

"At all times we met our obligation to deliver the best prices to clients and about five years ago we addressed the issues concerning communicating to clients about where their trades were executed," the spokesman said.

Shares of Bank of America were down 2.4% in late morning trading.

Write to Allison Prang at allison.prang@wsj.com

(END) Dow Jones Newswires

March 23, 2018 12:04 ET (16:04 GMT)

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