According to the AG’s Office, Bank of America Merrill Lynch accomplished its fraud through “masking.” The process involves changing the identity of the ELP and the trade confirmation message sent back to clients.
Although the ELP executed the trade, the code indicated that it happened in-house at Bank of America Merrill Lynch. The firm used masking to over 16 million client orders between 2008 and 2013, representing more than 4 billion trades.
Bank of America Merrill Lynch misrepresented its electronic trading services
In addition, the AG’s Office found that Bank of America Merrill Lynch misrepresented its electronic trading services to investors. Its objective was to make its electronic trading services look more safe and sophisticated.
The firm inflated its claims regarding the amount of retail orders routed to and executed in its dark pool called. Over the past several years, the firm claimed that 20% or even 30% of orders in its dark pool came from retail traders. However, in reality, the orders in its dark pool accounted no more than 5%. Its dark pool is called Instinct X.
