The charges were given regarding the apparent failure of Merrill Lynch to deal with the complaints of 11 clients in 2008, which was followed by a rejection of the complaints.

According to the SFC, this action was in breach of Notes 1, 2 and 3 of the Code of Conduct.

It is not the first time Merrill Lynch has been disciplined, the SFC placing charges in May 2010 and May 2011 with fines of HK$3.5m and HK$3m respectively.

Merrill Lynch had not responded to a request for comment from PBI on the fines at the time of posting.

The clients in question had been victims of a fraud committed by a formal licensed representative of Merrill Lynch, Ms. Joyce Hsu Ming Mei, the SFC alleged.

Ms Mei, accredited to the bank between 2007 and 2008, was eventually convicted of 20 counts of thefts and several other dishonesty offences. The clients had invested $7.2m in the disputed investment products.

The SFC has claimed that Merrill Lynch made inquiries into the complaints but had failed to investigate reasons that some complaints were rejected.

It added that Merrill Lynch has since compensated nine of the affected clients, and is in the process of paying back the remaining two.


Source: Private Banker International