Would you like to know if your broker was previously sued by a client or accused of being an ax-murderer? Under the rules of the Financial Industry Regulatory Authority (FINRA) you have a right to know. But if your broker worked at Merrill Lynch, he or she could have had a long track record of providing irresponsible investment advice — or worse. And as a client or perspective client, you might not have known.
FINRA fined Merrill Lynch for $500,000 for failing to report hundreds of broker-related customer complaints, customer settlements, arbitrations and criminal and civil compaints. The independent retulatory agency found that between 2007 and 2011, Merrill Lynch failed to file or timely file more that 650 reports of broker-related customer complaints and customer settlements. For two years, it failed to report criminal and civil complaints 100% of the time.
It’s hard to view this action as a victory for the investment regulatory framework. It was Merrill Lynch, and not any regulatory agency, that first uncovered the problem during an internal review in 2009. Had Merrill Lynch not self-reported the problem to FINRA, investors may never have known about the brokerage firm’s regulatory failures.
Merrill Lynch’s failure to report problem brokers includes the time period when it operated as a public company and as it operates now, as a division of Bank of America.
Sources and Coverage:
FINRA Press Release
Reuters, Merrill Fined $500,000 for Not Filing Reports: FINRA
Corporate Crime Reporter, FINRA Fines Merrill Lynch $500,000