The brokerage unit of the Bank of America Corp (NYSE:BAC), Merrill Lynch was recently fined for an amount of $2.5 million in Massachusetts. Merrill Lynch has agreed that it shall pay the amount in order to settle charges against it regarding its own compliance rules slip. The apex securities regulator of Massachusetts imposed the fine on Bank of America for not adhering the guidelines and rules, laid down by it. The charges revolve around the clients’ priority and approval regarding certain kinds of accounts.
The charges on the firm
William Galvin, the Secretary of Commonwealth indicted Fenner & Smith, Lynch and Merrill of not adhering to the rules of compliance. Galvin said that the aforementioned parties failed to fulfil their responsibilities as the supervisors of employees during 2013 presentations, before selecting the materials with its Department of Compliance. Merrill Lynch has given two presentations to the financial advisers in January 2013. The same presentation was also given to other parties in Boston.
The root of charges: presentations to financial advisers
The purpose of these presentations was to assist these advisers in planning towards business growth and ensuring betterment of services provided by it to the clients. In one of the sections of these presentations, Merrill Lynch discussed about the agenda of transferring the assets of clients. This section discussed how clients’ assets could be transferred from the commission driven brokerage accounts to fiduciary fee driven accounts. However, despite discussing this point in the section, there was no explanation on suitability of clients for swapping of accounts like this.
The BAC Action
In the aforementioned charges, the Bank of America acted by cautioning its employees. The spokesman of the Bank said that BAC was reinstating its employees to get prior approval of the internal presentations.
Client’s priority and approval becomes an important issue in swapping of accounts like these. However, Bank of America Corp (NYSE:BAC) said that post-presentation or in context with the matter, no clients have been harmed.