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September 11, 2019

Merrill Lynch fined for lapses in responding to regulatory data requests

Merrill Lynch, Pierce, Fenner & Smith has been fined $300,000 by the U.S. Commodity Futures Trading Commission (CFTC) to settle allegations that it failed to provide audit trail data as requested by the regulator’s division of enforcement.

The lapses were said to occur over a period of three years. The watchdog alleged that the failures delayed one of its probe.

According to the regulator, the shortcomings were mainly due to the company’s inadequate processes for responding to regulatory data requests such as lack of a proper process to locate account numbers.

The regulator further said that Merrill Lynch has taken remedial measures in this regard.

In order to better respond to regulatory data requests, the company has now designated staff to interpret the requests and the information source, provide the data, as well as independently assess the process, CFTC noted.

CFTC director of the division of enforcement James McDonald said: “As this case shows, the CFTC will hold registrants accountable for their regulatory obligations.

“Recordkeeping requirements are important for regulatory and enforcement purposes, and the failure to produce reliable audit trail data here impeded a CFTC investigation.”

Merrill Lynch has been entangled in legal issues several times in the past.

Last June, it was fined $15m by the US Securities and Exchange Commission (SEC) to settle allegations related to residential mortgage backed securities (RMBS).

Later in 2018, the company was fined $8.9m by the SEC to resolve charges of failing to disclose conflict of interest over the management of third-party products.

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