Merrill Lynch fined $1 million for conflicts of interest; BoA picks up the tab

Another loss for Bank of America as Merrill is penalised for unfair practices

NEW YORK - Merrill Lynch has been fined $1 million by the Securities and Exchange Commission (SEC). The fine is for violating securities law and failing to disclose conflicts of interests when recommending its own consulting services to pensions clients.

The US regulator issued the penalty somewhat belatedly, as Merrill Lynch was purchased by rival Bank of America as of January 1, 2009. Merrill sustained a $15.3 billion loss for 2008 - compounded by early bonus payments of $4 billion - causing Bank of America to seek $20 billion recapitalisation and $118 billion in asset guarantees from the US Treasury last month. Bank of America is understood to have paid as much as $50 billion to buy Merrill.

The SEC complaint says Merrill failed to disclose its conflict of interest for advising clients to use directed brokerage services, thereby causing their money managers to conduct trades through Merrill - formerly Wall Street's largest brokerage. The regulator said Merrill and its consultants "could and often did receive significantly higher revenue" as a result of the unfair practices.

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact or view our subscription options here:

You are currently unable to copy this content. Please contact to find out more.

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here