The regulator said that the supervisory failures involved widespread deficiencies in filing hundreds of required reports, including customer complaints, arbitration claims, U4 and U5 related filings and for its failure to file the required reports.
FINRA claimed that the violations, which went undetected for several years, may have affected the investor’s ability to assess the background of certain brokers via BrokerCheck, FINRA’s public disclosure program.
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The violations might have also compromised the firms’ ability to conduct background checks while making hiring decisions apart from reducing the ability of securities regulators to review brokers’ transfer applications, FINRA added.
Commenting on the decision, FINRA executive vice president and chief of enforcement Brad Bennett said, "Firms that fail to file important regulatory information in a timely manner can compromise the integrity of CRD and BrokerCheck. In this instance, Merrill Lynch failed to report critical information that regulators and investors rely upon. Without timely and accurate reporting by firms, investors only have part of the picture when researching and making decisions about their brokers."
According to the regulatory body, Merrill Lynch failed to file or timely file more than 650 required reports from 2007 to 2011, which included customer’s complaints and their settlements.
Although, Merrill have neither admitted nor denied the charges in concluding the settlement, they have consented to the entry of FINRA’s findings.
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