UK Watchdog Fines Boa's Merrill Lynch $20 Million For Reporting Failures
Britain’s markets regulator has fined Bank of America Merrill Lynch a record 13.2 million pounds ($20 million) for failing to report transactions properly over seven years.
The Financial Conduct Authority (FCA) said on Wednesday that Bank of America’s Merrill Lynch International arm incorrectly reported 35 million transactions and failed to report another 121,387 transactions between November 2007 and November 2014.
Accurate and timely reporting of transactions was crucial for spotting insider trading and market manipulation, the FCA said.
The record fine for reporting failures reflected the severity of the misconduct and a failure to adequately address the root causes over several years despite substantial guidance from the regulator and a poor history of transaction reporting compliance, it added.
The fine follows a private warning to the bank in 2002 and a fine of 150,000 pounds in 2006.
“Proper transaction reporting really matters. Merrill Lynch International has failed to get this right again, despite a private warning, a previous fine, and extensive FCA guidance and enforcement action in this area,” said Georgina Philippou, acting head of enforcement at the FCA.
“The size of the fine sends a clear message that we expect to be heard and understood across the industry.”
Bank of America Merrill Lynch said it was wholly committed to complying with all FCA requirements and continuously sought to improve all necessary aspects of reporting.
“While regrettable, today’s decision principally refers to self identified issues which we have sought to remediate as quickly as possible. We can confirm that no clients were financially impacted as a result,” the bank said.
The FCA said the fine equated to 1.5 pounds per incorrect or non-reported data for the first time, up from a pound per line in the three most recent transaction reporting cases because those fines have not been high enough to achieve “credible deterrence”.
Bank of America Merrill Lynch would have been fined 19 million pounds had it not settled at an early stage to obtain a 30 percent discount.
The watchdog has, to date, fined 11 other firms for transaction reporting breaches: Deutsche Bank, Barclays, Credit Suisse, Instinet, Getco, Commerzbank, Societe Generale, City Index, James Sharp & Co, Plus500UK, and Royal Bank of Scotland.
The previous record fine for reporting breaches was 5.6 million pounds for RBS in 2013.