On June 21, 2012, the Financial Industry Regulatory Authority announced that it fined Merrill Lynch, Pierce, Fenner & Smith, Inc. $2.8 million for supervisory failures and the resulting overcharge to customers of $32 million in unwarranted fees, and for failing to provide required trade notices. Merrill Lynch provided $32 million in remediation, plus interest, to the affected customers.
From April 2003 to December 2011, Merrill Lynch failed to provide an adequate supervisory system to ensure that customers were billed in accordance with contract and disclosure documents. Due to this inadequacy, the firm overcharged approximately 95,000 customer accounts fees of more than $32 million. In addition, Merrill Lynch did not provide timely trade confirmations due to computer programing errors, which caused a failure to send customers trade confirmations for more than 10.6 million trades in over 230,000 customer accounts. Merrill Lynch did not properly identify whether it acted as an agent or a principal on trade confirmations and account statements relating to at least 7.5 million mutual fund purchase transactions. Merrill Lynch also failed to deliver certain proxy and voting materials, margin risk disclosure statements, and business continuity plans.
Merrill Lynch neither admitted nor denied the charges, but consented to the entry of FINRA’s order.