FINRA Fines Merrill Lynch $1.2M and $950K

Two Merrill Lynch Brokers Stole More Than $6M from 13 Clients 

In December 2021, the Financial Industry Regulatory Authority (FINRA) fined Merrill Lynch in two separate matters. 

One fine, of $950K,  is because the firm allegedly failed to detect that two of its financial advisors had stolen more than $6M from 13 customers in schemes that occurred over several years. This purportedly involved the transmission of funds through automated clearing house (ACH) transfers that were “externally initiated.” 

As a result, one Merrill broker made about $3.2M via approximately 270 unauthorized electronic transfers from five customer accounts. These included those belonging to four older clients. The other Merrill Lynch broker, who engaged in more than 300 unauthorized transfers from eight customer accounts, also stole about $3.2M. 

The self-regulatory organization (SRO) said that Merrill Lynch violated FINRA Rule 3110 regarding supervisory rules and Rule 2010 involving the standards of commercial honor and principles of trade. The firm fired at least one of the brokers. 

It was just in 2012 that Merrill was fined $450K for similar supervisory deficiencies, this time involving a Merrill Lynch broker who converted nearly $880K, also from 13 clients. In 2013, the broker-dealer fired a registered representative, who paid over $100K from two clients’ brokerage accounts via transfers to her own accounts.

$1.2M Fine Imposed by FINRA After Compliance Delays 

Again in December 2021, FINRA fined Merrill $1.2M after it allegedly failed to comply in two enforcement investigations involving another two brokers. 

This included not providing the SRO with certain documents for over two years because a record-keeping vendor no longer had the information. FINRA said that the delays got in the way of and lengthened its investigations. They also caused Merrill to violate Rule 8210 related to cooperating with enforcement probes and, again, Rule 2010.

One of the Merrill brokers was suspended in 2020 for allegedly selling away. The broker-dealer settled with the customer who was harmed. The other Merrill financial advisor was barred in early 2021. The broker-dealer reached settlements with three of the customers, who had alleged excessive and unauthorized trading, sales practice violations, and unsuitability.

Knowledgeable Broker-Dealer Negligence Law Firm 

Shepherd Smith Edwards and Kantas (SSEK Law Firm at represent investors against Merrill Lynch and other broker-dealers in recovering financial damages through FINRA arbitration. Call SSEK Law Firm at (800) 259-9010 today.

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