Merrill Lynch to Pay $415 Million to Settle SEC Charges Over Misused Customer Funds

Merrill Lynch has agreed to pay $415 million and admit wrongdoing in order to settle charges that it misused customer cash to generate profits, according to the Securities & Exchange Commission (SEC).

An investigation found that Merrill Lynch used client money that was supposed to be held in a reserve account to engage in complex options trades that “lacked economic substance and artificially reduced the required deposit of customer cash in the reserve account,” according to an SEC statement.

Merrill Lynch’s conduct allowed it to use billions of customers’ dollars to finance Merrill’s own trading activities between 2009 and 2012. Had the firm failed in its endeavors, customers would have been exposed to a “massive shortfall.” Between 2009 and 2015, Merrill reportedly held up $58 billion per day of customer securities in a clearing account subject to a general lien by the clearing bank. In fact, other accounts in banks outside of the U.S. were subject to similar liens.

Because of its repeated violations and misuse of customer funds, including during the worst of the financial crisis, Merrill Lynch agreed to the $415 million fine.

Have You Invested with Merrill Lynch?

The attorneys at Dimond Kaplan & Rothstein, P.A. have recovered more than $100 million from banks and brokerage firms for their wrongful actions.

If you believe your broker or brokerage firm has acted improperly, you may have certain legal rights that require your immediate attention. Contact us to schedule an appointment or consultation today.

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