September 28, 2016 Comments (0) Blog

Merrill Lynch fined $12.5m

(Last Updated On: September 28, 2016)

According to reports, Bank of America Corp.‘s Merrill Lynch unit has been fined $12.5 million to settle allegations that the broker’s weak controls led to multiple orders being sent to markets, resulting in mini-flash crashes.

According to a statement Monday from the U.S. Securities and Exchange Commission, the bank reportedly set its internal trading limits too high, so they were ineffective and caused market disruptions on at least 15 occasions from late 2012 to mid-2014 . Apparently, they included 99% drops in the stocks of Anadarko Petroleum Corp. and Qualys Inc., and an almost 3% dip in Google Inc.’s stock in less than a second in 2013.

The fine is the largest ever by the agency for violations of the market access rule, which governs brokers’ risk-management controls. Bank of America agreed to the SEC’s order without admitting or denying the findings.

The Financial Industry Regulatory Authority fined Merrill Lynch on behalf of the three largest U.S. exchange operators an additional $3 million for the infractions. Certain trading desks at the firm allegedly didn’t have controls in place to reject orders that were much higher or lower than a stock’s price, the exchanges and Finra said in a statement Monday.

Merrill Lynch also apparently filed more than 200 petitions to label trades “clearly erroneous” between July 2011 and October 2014, raising concerns among the exchanges.

The foregoing information has been provided by The White Law Group, a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.

For a free consultation with a securities attorney, please call The White Law Group at 888-637-5510.

For more information on the firm and its representation of investors, visit http://www.whitesecuritieslaw.com.