WASHINGTON (Sputnik) — Merrill Lynch is the New York-based wealth management and investment division of Bank of America.
"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 SEC Enforcement Division chief Andrew Ceresney. "Merrill Lynch violated these rules, including during the heart of the financial crisis, and the significant relief imposed today reflects the severity of its failures."
The SEC explained that from 2009 to 2015, Merrill Lynch mishandled customer funds that should have been deposited in a reserve account.
Merrill Lynch used the funds for "complex options trades" that freed up billions of dollars per week for the firm’s own trading activity, the SEC added.
Furthermore, the firm violated the SEC’s Consumer Protection Rule by failing to shield customer securities against potential claims from its creditors.
According to the SEC, Merrill Lynch held up to $58 billion per day in consumer securities in an account that was subject to liens.
If the firm had collapsed, customers would have been exposed to "significant risk and uncertainty" of getting back their own money, the SEC pointed out.
The SEC also noted it will launch an effort to find potential violations by other firms and uncover additional abuses of the Consumer Protection Rule.
