The Securities and Exchange Commission (SEC) recently announced that it
ordered Merrill Lynch, Pierce, Fenner & Smith Inc. more than $15 million
over charges that its employees mislead customers into overpaying for
their Residential Mortgage Backed Securities (RMBS).
According to the SEC, Merrill Lynch agreed to pay $5.2 million in penalties and will repay
customers an estimated $10.5 million. The salespeople and traders reportedly
deceived customers into overpaying for RMBS by telling them that the company
paid more to acquire the securities than it actually did. In addition
to that, the SEC also found that the salespeople and traders illegally
profited from undisclosed and excessive commissions, also referred to
as mark-ups, which as much as doubled the cost for customers in some cases.
In the order, the SEC also states that Merrill Lynch did not have the
necessary compliance and surveillance procedures in place to detect and
prevent this type of misconduct from occurring.
“In opaque RMBS markets, lying to customers about the acquisition
price can deprive investors of important information,” said Daniel
Michael, Chief of the SEC Enforcement Division’s Complex Financial
Instruments Unit. “The Commission found that Merrill Lynch failed
in its obligation to supervise traders who allegedly used their access
to market information to take advantage of the bank’s own customers.”
If you were the victim of stockbroker misconduct, you may be able to take
your case to court to secure the compensation you deserve. Contact our
securities fraud attorneys at Meyer Wilson today to discuss your case
by calling us at (888) 390-6491, or by
filling out our online form to schedule a free case consultation.