Merrill Lynch to Pay $13.5-Million Settlement
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Merrill Lynch & Co. agreed to pay $13.5 million to resolve claims that it failed to supervise employees who made improper mutual fund trades, authorities said Tuesday.
The settlement comes after an investigation by New Jersey, Connecticut and the New York Stock Exchange into trades made at Merrill Lynch’s Fort Lee, N.J., office.
New Jersey and Connecticut will divide the fine and receive $10 million and $3.5 million, respectively, while the NYSE censured the brokerage.
Merrill Lynch, the No. 1 U.S. brokerage with more than 14,000 financial advisors, said that it had fired three financial advisors who engaged in market-timing mutual funds. Three supervisors also were sanctioned.
Market timing is the short-term buying and selling of mutual fund shares to exploit inefficiencies in pricing. The practice harms other shareholders because the heightened trading activity requires a fund to set aside more money in liquid assets. That restricts the investments a firm can make, limiting potential profits.
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