Merrill Lynch, Pierce, Fenner & Smith Incorporated has settled with the Financial Industry Regulatory Authority (FINRA) over alleged rule violations.
From January 2018 through June 2022, in connection with brokerage transactions involving certain products eligible for exemption from advisory fees, Merrill Lynch failed to establish and maintain a system of oversight and written procedures reasonably designed to ensure that registrants its agents had a reasonable basis to believe their recommendations were appropriate or in the best interest of each client.
As a result of the company’s oversight failures, customers who maintained more than 2,000 accounts paid nearly $1.5 million in avoidable charges.
By virtue of the foregoing, Merrill Lynch violated FINRA Rules 3110 and 2010.
In addition, for the period from June 30, 2020 to June 30, 2022, Merrill Lynch also violated the Securities Exchange Act of 1934, Rule 15l- l(a)(1) by failing to comply with the Compliance Obligation of the Best Interest Rule ( Reg BI).
The defendant agreed to disgorgement and restitution of $1,486,380 plus interest to be paid to 1,361 unique customers.