NEW YORK, June 23 (UPI) — Bank of America Corp., the nation’s largest bank, has agreed to pay $430 million and admit wrongdoing after its Merrill Lynch wealth management arm misused customer cash.
The company generated profits and issued misleading offering documents for structured notes off of the money, the Securities and Exchange Commission said Thursday.
Merrill Lynch violated the SEC’s customer protection rule when it misused customer money that legally should have been in a reserve accounts, an SEC investigation found.
The brokerage also made trades in options that “lacked economic substance and artificially reduced the required deposit of customer cash in the reserve account.” It was an action that made billions of dollars available that Merrill Lynch used to pay for its own trading, the SEC said.
Merrill Lynch customers “would have been exposed to a massive shortfall in the reserve account” if the brokerage had failed during the options trades, the SEC said, and Merrill Lynch has admitted to wrongdoing.
“The rules concerning the safety of customer cash and securities are fundamental protections for investors and impose lines that simply can never be crossed,” said Andrew Ceresney, head of the SEC’s enforcement division, in a statement.
Bank of America said it has cooperated fully with SEC investigators.
“While no customers were harmed and no losses were incurred, our responsibility is to protect customer assets and we have dedicated significant resources to reviewing and enhancing our processes. The issues related to our procedures and controls have been corrected,” the bank said in a statement.
COMMENTS
Please let us know if you're having issues with commenting.