{"id":3981,"date":"2016-12-01T15:12:05","date_gmt":"2016-12-01T21:12:05","guid":{"rendered":"https:\/\/www.stockbrokerfraudblog.com\/?p=3981"},"modified":"2022-03-28T11:12:08","modified_gmt":"2022-03-28T16:12:08","slug":"finra-orders-merrill-lynch-pay-7m-including-780k-restitution-customers-invested-puerto-rico-securities","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/finra-orders-merrill-lynch-pay-7m-including-780k-restitution-customers-invested-puerto-rico-securities\/","title":{"rendered":"FINRA Orders Merrill Lynch to Pay $7M, Including $780K in Restitution to Customers that Invested in Puerto Rico Securities"},"content":{"rendered":"

The Financial Industry Regulatory Authority (\u201cFINRA\u201d) \u00a0has fined\u00a0Merrill Lynch, Pierce, Fenner & Smith Inc (\u201cMerrill Lynch\u201d)<\/a>\u00a0$6.25 million and imposed a restitution penalty of $780,000 over\u00a0Merrill Lynch\u2019s inadequate supervision of its customers that employed leverage in brokerage accounts, as well as its failure to supervise the way that these customers were able use the proceeds from their loan managed accounts (\u201cLMAs\u201d).\u00a0LMAs are credit lines that let customers use the securities in their brokerage accounts as collateral in order to borrow funds from a bank affiliate.\u00a0 However, these LMAs are not supposed to be used to purchase additional securities.<\/p>\n

The $780,000 will go to customers that invested in Puerto Rico municipal bonds and Puerto Rico closed-end bond funds. By settling Merrill Lynch is not admitting or denying FINRA\u2019s findings.<\/p>\n

According to FINRA, Merrill Lynch did not have these adequate procedures and supervisory systems at issue in place from 1\/2010 through 11\/2014. FINRA\u00a0found that even though Merrill Lynch\u2019s policy and non-purpose LMA agreements barred customers from using LMA proceeds to buy different kinds of securities, there were thousands of times during the relevant period that, within two weeks of getting LMA proceeds, Merrill Lynch brokerage accounts collectively purchased hundreds of millions of dollars of securities. Merrill Lynch also set up over 121,000 LMAs, with Bank of America (\u201cBAC\u201d) extending over $85 Billion in aggregate credit. FINRA said that all of this was able to happen because the firm\u2019s supervisory procedures and systems were inadequate.<\/p>\n

Continue Reading \u203a<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The Financial Industry Regulatory Authority (\u201cFINRA\u201d) \u00a0has fined\u00a0Merrill Lynch, Pierce, Fenner & Smith Inc (\u201cMerrill Lynch\u201d)\u00a0$6.25 million and imposed a restitution penalty of $780,000 over\u00a0Merrill Lynch\u2019s inadequate supervision of its customers that employed leverage in brokerage accounts, as well as its failure to supervise the way that these customers were able use the proceeds from […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3752,3800,3922,4039],"tags":[],"class_list":["post-3981","post","type-post","status-publish","format-standard","hentry","category-financial-firms","category-merrill-lynch","category-municipal-bonds","category-puerto-rico-bond-funds"],"yoast_head":"\nFINRA Orders Merrill Lynch to Pay $7M, Including $780K in Restitution to Customers that Invested in Puerto Rico Securities — Investor Lawyers Blog — December 1, 2016<\/title>\n<meta name=\"description\" content=\"The Financial Industry Regulatory Authority (\u201cFINRA\u201d) \u00a0has fined\u00a0Merrill Lynch, Pierce, Fenner & Smith Inc (\u201cMerrill Lynch\u201d)\u00a0$6.25 million and imposed — December 1, 2016\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.investorlawyers.com\/blog\/finra-orders-merrill-lynch-pay-7m-including-780k-restitution-customers-invested-puerto-rico-securities\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"FINRA Orders Merrill Lynch to Pay $7M, Including $780K in Restitution to Customers that Invested in Puerto Rico Securities — Investor Lawyers Blog — December 1, 2016\" \/>\n<meta name=\"twitter:description\" content=\"The Financial Industry Regulatory Authority (\u201cFINRA\u201d) \u00a0has fined\u00a0Merrill Lynch, Pierce, Fenner & Smith Inc (\u201cMerrill Lynch\u201d)\u00a0$6.25 million and imposed — December 1, 2016\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Shepherd Smith Edwards & Kantas, LLP\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"FINRA Orders Merrill Lynch to Pay $7M, Including $780K in Restitution to Customers that Invested in Puerto Rico Securities — Investor Lawyers Blog — December 1, 2016","description":"The Financial Industry Regulatory Authority (\u201cFINRA\u201d) \u00a0has fined\u00a0Merrill Lynch, Pierce, Fenner & Smith Inc (\u201cMerrill Lynch\u201d)\u00a0$6.25 million and imposed — December 1, 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