FINRA fines Merrill Lynch $500K for missed filings

FINRA has announced fines in the amount of a half-million dollars for Merrill Lynch, Peirce, Fenner & Smith following allegations of widespread failures in filing regulatory information, as far back as 2005.

The financial regulator says that Merrill Lynch failed to file hundreds of reports, including customer complaints and arbitration claims, and that the violations may have hampered investors' ability to check the backgrounds of many affiliated brokers over that time.

The violations are also said to have gone undetected for several years.

From 2007 to 2011, FINRA claims the company failed to file (or timely file) more than 650 required reports, and that from 2005 to 2011, the company failed to report or report in a timely fashion customer complaints between a quarter and two thirds of the time.

FINRA also says Merrill Lynch failed to adequately train and supervise the personnel responsible for complaint tracking and reporting, nor could it identify the high volume of customer complaints being neglected - with approximately 300 consumer complaints left unanswered in adequate time.

The company was also sanctioned for failing to file notice of approximately 300 arbitrations, criminal and civil complaints from 2007 to 2010.

FINRA says the company's actions may have compromised outside firms' ability to conduct background checks, reduced the ability of securities regulators to review brokers' transfer applications and hindered FINRA from promptly investigating a range of disclosure items.

"Firms that fail to file important regulatory information in a timely manner can compromise the integrity of CRD [Central Registration Depository] and BrokerCheck [FINRA's public disclosure system]," said Brad Bennett, FINRA's executive vice president and chief of enforcement. "Without timely and accurate reporting by firms, investors have only part of the picture when researching and making decisions about their brokers."

Merrill neither admitted nor denied the charges, but consented to the entry of FINRA's findings.

Under FINRA rules, when a securities firm hires a broker, it must makes ure that the information on the broker's registration application is updated and kept current on the CRD. 


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