The Financial Industry Regulatory Authority (FINRA) finedMerrill Lynch, Pierce, Fenner & Smith, Inc. $2.8 million forsupervisory failures that resulted in overcharging customers $32million in unwarranted fees, and for failing to provide certainrequired trade notices. Merrill Lynch has provided $32 million inremediation, plus interest, to affected customers.

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“Investors must be able to trust that the fees charged by theirsecurities firm are, in fact, correct. When this is not the case,investor confidence is threatened,” said Brad Bennett, FINRA’sexecutive vice president and chief of enforcement.

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FINRA found that from April 2003 to December 2011, Merrill Lynchfailed to have an adequate supervisory system to ensure thatcustomers in certain investment advisory programs were billed inaccordance with contract and disclosure documents. As a result, thefirm overcharged nearly 95,000 customer accounts fees of more than$32 million.

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Merrill Lynch also failed to provide timely trade confirmationsto customers in certain advisory programs due to computerprogramming errors. As a result, from July 2006 to November 2010,Merrill Lynch failed to send customers trade confirmations for morethan 10.6 million trades in over 230,000 customer accounts. Inaddition, Merrill Lynch failed to properly identify whether itacted as an agent or principal on trade confirmations and accountstatements relating to at least 7.5 million mutual fund purchasetransactions. At various times, Merrill Lynch also failed todeliver certain proxy and voting materials, margin risk disclosurestatements and business continuity plans.

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Merrill Lynch didn’t admit or deny the charges, but consented tothe entry of FINRA’s findings.

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The Financial Industry Regulatory Authority is the largestindependent regulator for all securities firms doing business inthe United States. FINRA is dedicated to investor protection andmarket integrity through effective and efficient regulation andcomplementary compliance and technology-based services.

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