Defendant Name:
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Defendant Type:
Subsidiary of Public Company
Public Company Parent:
Bank of America Corporation
SIC Code:
6021
CUSIP:
06050510
Document Reference:
34-78141
Document Details
Legal Case Name
In the Matter of Merrill Lynch, Pierce, Fenner & Smith Incorporated and Merrill Lynch Professional Clearing Corp.
Document Name
Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order
Document Date
23-Jun-2016
Document Format
Administrative Proceeding
Allegation Type
Broker Dealer
Document Summary
On June 23, 2016, the SEC instituted settled administrative and cease-and-desist proceedings against Merrill Lynch, Pierce, Fenner & Smith Incorporated ('MLPF&S") and Merrill Lynch Professional Clearing Corp. ("MLPro"), collectively referred to as "ML". According to the SEC: "Broker-dealers are required to be diligent stewards of the cash and securities entrusted to them by their customers. This basic principle is embodied in Exchange Act Rule 15c3-3, known as the Customer Protection Rule ('Rule'). The Rule requires broker-dealers to safeguard both the cash and securities of their customers so that customer assets can be quickly returned if the firm fails. In broad strokes, a broker-dealer cannot use customer assets to finance the business activities of the firm, and it cannot place customer assets in locations or accounts that make them vulnerable to claims made against the broker-dealer by third parties. This matter arises from significant violations of the Customer Protection Rule that began during the Financial Crisis and, in certain respects, continued until this year. The violations were twofold. First, ML used cash belonging to its customers to fund its own business activities through a series of increasingly complex trades. Second, at the same time and continuing for years due to poor oversight and weak controls, MLPF&S allowed certain of its clearing banks to hold general liens over tens of billions of dollars of securities owned by its customers."
Disgorgement & Penalty Information
Resolutions
Cease and Desist Order
Censured
Compliance Related Independent Consultant
Other Compliance Related Undertaking
Cooperation Before the Resolution
Remedial Acts or Efforts Before the Resolution
Monetary Penalties:
Disgorgement
Individual:
Shared:
$50,000,000.00
Shared with: Merrill Lynch Professional Clearing Corp.
Civil Penalty
Individual:
$358,000,000.00
Shared:
Pre-Judgment Interest
Individual:
Shared:
$7,000,000.00
Shared with: Merrill Lynch Professional Clearing Corp.
Other Defendants in Action:
