CTFC fines Merrill Lynch $1.2 million 29 August 2014Washington DC Reporter: Catherine Van de Stouwe
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A $1.2 million penalty fine has been issued to Merrill Lynch, Pierce, Fenner & Smith (Merrill Lynch) for failing to diligently supervise its officers’, employees’ and agents’ processing of futures exchange and clearing fees charged to its customers.
The fine, issued by the US Commodity Futures Trading Commission (CFTC), covers the period from 1 January 2010 to April 2013.
The CFTC Order founds that Merrill Lynch’s fee reconciliation process for identifying and correcting discrepancies between invoices from the exchange clearinghouses and the amounts charged its customers had been faulty for more than two years.
As a result, Merrill Lynch over-charged some clients and under-charged fees from others. These fee reconciliations show that Merrill Lynch paid more than $318 million in exchange and clearing fees to the CME Group and the Chicago Board of Trade during the time, but had unexplained over-charges of over $451,000 from 196 clients.
The Order also found that Merrill Lynch did not hire qualified personnel to conduct and oversee its fee reconciliations and did not provide any completed procedures manuals regarding fee reconciliations to its stuff until at least April 2013.
The fine has been given as a violation of the CFTC Regulation 166.3 governing diligent supervision.
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