Merrill Lynch, Pierce, Fenner & Smith Inc. Fined $42 Million for Misleading Customers

The Securities and Exchange Commission (SEC) recently announced that Merrill Lynch has agreed to pay $42 million for misleading its customers and its handling of trading orders.

The SEC stated that the wealth management firm told customers that it had performed millions internal orders, when it actually routed them to other broker-dealers for execution, including wholesale market makers and proprietary trading firms.

This is a practice commonly referred to as masking. According to the SEC, Merrill Lynch needed to reprogram its systems to provide misleading responses to customer inquiries, alter reports and records, and falsely report execution venues in order to pull this off.

While Merrill Lynch stopped this practice in May 2013, it failed to inform its customers about its past actions. Instead, it continued to hide its previous misconduct. The SEC’s investigation discovered that the company falsely told its customers that it performed over 15 million child orders comprising comprised more than five billion shares than the company actually completed.

These actions allowed Merrill Lynch to appear far more active as a trading center than it actually was, which in turn reduced the cost of access fees it paid to exchanges at that time.

If you lost money because of your financial adviser’s actions, you may be able to file a lawsuit to secure the compensation you deserve. At Meyer Wilson, our investment fraud lawyers have nearly two decades of experienced handling these types of cases, and will put that knowledge to use fighting for your rights in court or at the negotiation table. Call us at (800) 738-1960 to speak with a member of our firm today, or fill out our online form to schedule a free consultation.

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