SEC hits Merrill Lynch with $15M penalty over RMBS sales practices
Merrill Lynch will pay more than $15 million to settle SEC charges the firm misled clients into overpaying for residential mortgage backed securities, the regulator announced Wednesday.
The misconduct occurred over a three year period in which Merrill Lynch’s RMBS traders and salespersons misled clients into overpaying for the securities by deceiving them about the price Merrill Lynch had paid to acquire them; the firm's traders and salespersons also illegally profited from excessive, undisclosed commissions ― sometimes more than double the price of what Merrill had paid for the same product, the SEC says.
Kwame Brown has played for teams such as the Los Angeles Lakers and Washington Wizards.May 11
In total, Merrill Lynch notched profits of around $8.6 million between 2009 and 2012, according to the SEC.
"In opaque RMBS markets, lying to customers about the acquisition price can deprive investors of important information," Daniel Michael, chief of the SEC Enforcement Division’s Complex Financial Instruments Unit, said in a statement.
The regulator also faulted Merrill's supervisory procedures as insufficient.
“We have addressed issues raised in this matter, which occurred between 2009 and 2012, and taken steps to improve our procedures,” a Merrill Lynch spokesman wrote in an email.
Merrill Lynch did not admit to or deny the findings, but agreed to pay the penalty and reimbursements as well as submit to censuring by the SEC.