NEW YORK, Oct 18 (Reuters) - The Financial Industry Regulatory Authority fined Bank of America’s Merrill Lynch $2.8 million on Tuesday for what it called systemic violations in record-keeping and how the firm reported trades and order audit trail system data.
The allegations involve trade and order audit data that brokerages submit to FINRA, and which the regulator uses to detect, among other things, possible market manipulation.
Merrill Lynch neither admitted nor denied the charges, but consented to FINRA’s findings and agreed to pay the fine.
FINRA accused Merrill Lynch of submitting millions of inaccurate trades, some which listed purchases as sales, broker-dealer trade orders filed as customer orders, inaccurate or incomplete order events and audit data, and several million orders it just did not need to submit, among other things.
The problematic reports and record-keeping errors, which affected hundreds of millions of trades, orders and accounts from 2010 to 2015, occurred because of a system configuration error, according to regulatory documents.
Bank of America spokesman Bill Halldin said that the firm has been “working with regulators to improve our processes and systems to address these issues.”
The Wall Street regulator claims reporting issues like these make it harder to detect other wrongdoing and can create false red flags, which the agency then has to chase down.
“A critical component of market integrity is the ability ... to rely on the accuracy of information reported by broker-dealers,” FINRA head of market regulation Thomas Gira said.
FINRA said that $1.45 million of the total fine is for books and records violations, one of the highest fines for that type of violation handed down this year.
On Monday, FINRA’s market regulation department reached a settlement with Morgan Stanley in which the wealth management firm agreed to pay $2.2 million to resolve allegations that it also submitted millions of inaccurate or incomplete trade reports. (Reporting by Elizabeth Dilts; Editing by Will Dunham)