SEC, FINRA Fine Merrill Lynch

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SEC, FINRA Fine Merrill Lynch

Following on the heels of Merrill Lynch’s agreement yesterday to pay $415 million to settle claims made by the SEC, the commission and FINRA fined the firm an additional $15 million in another action brought by the SEC and a third brought by FINRA.

In an announcement yesterday, the SEC stated that Merrill Lynch agreed to pay a $10 million penalty to settle claims that it made misleading statements in materials provided to retail investors for structured notes linked to a proprietary volatility index. These materials highlighted the commissions that were charged and the annual fee. However, they failed to disclose a quarterly cost of 1.5% that was tied to the value of the volatility index.

The notes were issued by Bank of America. Merrill Lynch had “principal responsibility for drafting and reviewing the retail pricing supplements,” the SEC said.

FINRA stated that it also fined the firm $5 million for “negligent disclosure failures” in the sale of the volatility-linked structured notes. Merrill Lynch neither admitted nor denied the structured note charges made by SEC and FINRA.

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