Merrill Lynch Settles SEC Charges for Nearly $9 Million

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Wall Street behemoth Merrill Lynch, Pierce, Fenner & Smith agreed to pay nearly $8.9 million to settle charges by the Securities and Exchange Commission. The SEC says that the firm failed to disclose a conflict of interest regarding how the firm decided to continue to offer certain products.

The SEC determined that the conflict of interest arose from how Merrill Lynch handled its third-party products.

The financial products were managed by a U.S. subsidiary of a foreign multinational bank, wherein at least 1,500 of Merrill’s retail advisory accounts invested nearly $575 million. According to the SEC order, Merrill Lynch halted new investments into the third-party products, mainly due to pending management changes at the third party. Further, Merrill’s governance committee planned to vote on a recommendation to terminate the products and offer alternatives to investors.

Per the SEC order, the third-party manager tried to avert the termination by opening a dialogue with senior Merrill Lynch executives, leveraging the broader business relationship.