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Merrill Fined $26M Over Alleged Failure to Report “Suspicious” Transactions

December 22, 2017

The SEC and Finra are fining Merrill Lynch a total of $26 million alleging failures in reporting “suspicious” transactions, Reuters reports citing documentation from the securities regulator.

From 2010 to 2011 the wirehouse allegedly failed to properly monitor brokerage accounts for illegal activity, sources familiar with the matter tell the newswire. Merrill Lynch allegedly offered its brokerage clients traditional banking services, such as cash deposits at ATMs and wire transfers to offshore firms, without using its screening software to highlight potentially illegal activity, one source tells Reuters.

The SEC issued a $13 million fine and a cease-and-desist order Thursday, alleging that, from 2011 to 2015, Merrill Lynch’s anti-money laundering policies were insufficient to account for the additional risk from such banking services.

Finra is expected to issue a $13 million fine in the next several days, according to Reuters. Spokespeople for the SEC and Merrill Lynch declined comment to the newswire, while a Finra spokeswoman did not reply to its request for comment, Reuters reports.

Separately, a Miami court has ordered the wirehouse to pay $25 million in a class action settlement related to failures to pass on sales charge waivers on mutual funds, ThinkAdvisor writes.

Merrill Lynch had paid back $79 million to thousands of small-business retirement plan clients in 2014 following a settlement with Finra, according to the publication. But two Miami-area retirement plans filed a suit in the U.S. District Court of the Southern District of Florida in 2015, alleging the refund wasn’t enough, ThinkAdvisor writes.

Finra found Merrill Lynch failed to waive sales charges on Class A mutual fund shares or charged higher fees and expenses for other share classes to about 41,000 small-business retirement plan accounts and around 6,800 charities, according to the publication.

Trustees for LAAD Retirement Plans requested to see the methodology for the remediation payments following the Finra settlement and, when they didn’t get the response they wanted, sued Merrill Lynch for more, ThinkAdvisor writes.

The settlement includes $8.8 million in corrective remediation and $16 million in disgorged profits, according to the publication.

Meantime, Merrill Lynch is searching for a replacement to lead its “flagship” Fifth Avenue Financial Center branch in New York after the Wednesday departure of its head of advisor training, according to reports.

Racquel Oden had been at her post since early 2016, after taking over from Jeffrey Tucker, sources tell AdvisorHub. She joined Merrill Lynch in 2010 from UBS Wealth Management Americas, where she oversaw internal product sales, according to her LinkedIn profile.


Prior to heading advisor training at Merrill Lynch’s Manhattan branch, Oden ran the wirehouse’s new broker training program, its banking center advisor training program and its financial advisor team program for more experienced reps, the publication writes, adding she was “one of the highest ranking women and black executives” in the wealth management operations of Bank of America, Merrill Lynch’s parent company.

A Merrill Lynch spokesman confirmed Oden’s departure to the publication but Oden did not return its call for comment.

By Alex Padalka
  • To read the ThinkAdvisor article cited in this story, click here.
  • To read the AdvisorHub article cited in this story, click here.
  • To read the Reuters article cited in this story, click here.