The Financial Industry Regulatory Authority
fined Bank of America's Merrill Lynch $2.8 million on
Tuesday for what it called systemic violations in record-keeping
and how the firm reported trades and order audit trail system
The allegations involve trade and order audit data that
brokerages submit to FINRA, and which the regulator uses to
detect, among other things, possible market manipulation.
Merrill Lynch neither admitted nor denied the charges, but
consented to FINRA's findings and agreed to pay the fine.
FINRA accused Merrill Lynch of submitting millions of
inaccurate trades, some which listed purchases as sales,
broker-dealer trade orders filed as customer orders, inaccurate
or incomplete order events and audit data, and several million
orders it just did not need to submit, among other things.
The problematic reports and record-keeping errors, which
affected hundreds of millions of trades, orders and accounts
from 2010 to 2015, occurred because of a system configuration
error, according to regulatory documents.
Bank of America spokesman Bill Halldin said that the firm
has been "working with regulators to improve our processes and
systems to address these issues."
The Wall Street regulator claims reporting issues like these
make it harder to detect other wrongdoing and can create false
red flags, which the agency then has to chase down.
"A critical component of market integrity is the ability ...
to rely on the accuracy of information reported by
broker-dealers," FINRA head of market regulation Thomas Gira
FINRA said that $1.45 million of the total fine is for books
and records violations, one of the highest fines for that type
of violation handed down this year.
On Monday, FINRA's market regulation department reached a
settlement with Morgan Stanley in which the wealth management
firm agreed to pay $2.2 million to resolve allegations that it
also submitted millions of inaccurate or incomplete trade