By Courtney Werning
According to the Financial Industry Regulatory Authority (FINRA),
It has fined Merrill Lynch, Pierce, Fenner & Smith, Inc. $8 million
for failing to waive
mutual fund sales charges for certain charities and retirement accounts. FINRA also
ordered Merrill Lynch to pay $24.4 million in restitution to affected
customers, in addition to $64.8 million the firm has already repaid to
disadvantaged investors. Many mutual funds waive their upfront sales charges
for retirement accounts and some waive these charges for charities.
FINRA alleged that Merrill Lynch failed to waive certain sales charges,
with these failures dating back to 2006. This led to unnecessary mutual
fund sales charges paid by small business retirement plans, charitable
organizations, and retirement plans for ministers and public school employees.
FINRA also stated that, even though Merrill Lynch became aware of the
overcharging in 2006, they did nothing to stop it, and instead continued
to sell them for more than five years.
In the complaint, FINRA also noted that Merrill Lynch did have written
supervisory systems, but they did not provide enough information to guide
investors on waivers for mutual fund sales charges. Merrill Lynch, according
to FINRA, learned that they were not providing the necessary charge waivers,
but continued to provide inadequate supervision of these sales or inform
investors of more cost-effective alternatives.
In addition to the $8 million fine, FINRA also ordered Merrill Lynch to
pay $24.4 million in restitution to affected customers.