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FINRA fines Merrill $2.8 million for excess fees
June 21, 2012 / 2:41 PM / in 5 years

FINRA fines Merrill $2.8 million for excess fees

(Reuters) - Merrill Lynch must pay a $2.8 million fine for overcharging customers $32 million in fees, among other things, Wall Street’s industry-funded regulator said on Thursday.

A Bank of America Merrill Lynch sign is seen on a building that houses its offices in Singapore May 17, 2012. REUTERS/Tim Chong

The Financial Industry Regulatory Authority alleged that Merrill Lynch, part of Bank of America Corp did not have an adequate supervisory system in place between April 2003 and December 2011 to ensure customers were billed properly, according to a settlement document in the case.

About 95,000 customer accounts were overcharged as a result, the regulator said. Merrill also failed to send trade confirmations for over 10.6 million trades in more than 230,000 customer accounts between 2006 and 2010, according to the settlement.

Merrill has provided $32 million in remediation plus interest to customers, according to FINRA.

“Following Bank of America’s acquisition of Merrill Lynch, we identified operational issues that affected certain investment advisory accounts,” said Merrill Lynch spokesman William Halldin on Thursday.

The issues were mainly the result of improper account coding. Merrill Lynch has improved its systems to address those problems, in addition to reimbursing clients, Halldin said.

Merrill’s $32 million in overcharges occurred in certain investment advisory accounts, for which investors agreed to pay an annual flat fee for Merrill’s services, typically a percentage of their overall portfolios.

Certain customers, however, were entitled to pay lower percentages, based on factors such as total assets invested at the firm and types of securities they held. But many clients were not charged the lower fees because of problems with Merrill’s data and billing system, among other things, according to the settlement. Additional overcharges occurred regarding certain mutual funds and wire transfers.

Merrill did not admit or deny the charges as part of the settlement.

FINRA, in determining the $2.6 million sanction, took into account the fact that Merrill identified the overcharging violations during its own internal review and made efforts to reimburse customers, according to the settlement.

Reporting by Suzanne Barlyn and Jonathan Stempel; Editing by Maureen Bavdek and Bernadette Baum

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