‘Selling Away’ Abuses Result in Merrill Lynch Being Fined $1 Million

 

Merrill Lynch agreed to pay $1 million to settle charges by the Financial Industry Regulatory Authority (FINRA) that it failed to supervise Bruce Hammonds, a San Antonio-based representative, who was ‘selling away’ from the firm by operating a $1 million dollar Ponzi scheme for more than 10 months. The ponzi scheme, named B&J Partnership, used Merrill Lynch accounts.

FINRA said that Merrill Lynch’s excessive reliance on employee self-reporting and generally inadequate system of supervision enabled Hammonds to perpetrate the Ponzi scheme. “Firms must ensure their supervisory systems are designed to properly monitor employee accounts for potential misconduct,” Brad Bennett, head of enforcement at FINRA, was quoted as saying.

According to FINRA, from 2006 to 2010, Merrill Lynch failed to monitor 40,000 employee accounts because an employee’s social security number was not the primary account number. Its system was not set up to detect them.

Merrill Lynch reportedly reimbursed all defrauded investors. FINRA permanently barred Hammonds from the securities industry in December 2009.
Merrill Lynch was acquired by Bank of America in 2009.

Bank of America Merrill Lynch settled FINRA’s charges without admitting or denying wrongdoing, which FINRA customarily allows its member firms to do. FINRA is the securities industry’s “self-regulatory” organization, and is funded by the firms it is charged with regulating.

Page Perry is an Atlanta-based law firm with over 150 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 45 occasions. For further information, please contact us.