Merrill Lynch has agreed to pay US$415 million to settle US Securities and Exchange Commission (SEC) charges that it provided misused customer cash and failed to safeguard customer securities from the claims of its potential creditors.
Merrill Lynch violated the SEC’s customer protection rule by failing to adhere to requirements that fully-paid for customer securities be held in lien-free accounts and shielded from claims by third parties should a firm collapse.
In addition, the bank violated Exchange Act Rule 21F-17 by using language in severance agreements that operated to impede employees from providing information to the SEC voluntarily.
Merrill Lynch co-operated with the SEC investigation and has engaged in extensive remediation.
The bank agreed to pay US$57 million in disgorgement and interest plus a US$358 million penalty, and acknowledged violations of the federal securities laws publicly.
Copies of the SEC notice and related press release are available.
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