Merrill Lynch Cops US$2.5-million For Email Discovery Lag
Merrill Lynch Cops US$2.5-million For Email Discovery Lag
March 17th, 2006: Yet another major financial services institution takes an unnecessary hit to its shareholders by not delivering relevant emails to a court hearing.
Not only has Merrill Lynch lost $US5-million in a National Association of Securities Dealers (NASD) fine for call centre it compounded it woes this with a further US$2.5-million Securities and Exchange Commission (SEC) fine for failing to deliver evidentiary emails.
The SEC fine relates to emails sent and received at the company between October 2003 and February 2005. As Wall Street brokers are required to retain emails for three years, and Merrill Lynch were either unable or unwilling to produce its archive, the SEC noted that, '…its (Merrill Lynch's policies and procedures designed for the prompt production of email were deficient'.
The larger NASD fine relates to improper financial operations. According to NASD, '… from 2001 to 2004, Merrill Lynch did not have an adequate supervisory system and procedures that were reasonably designed to oversee the trading activities of its registered representatives at the FAC (Financial Advisory Center), referred to within the firm as Investment Service Advisors (ISAs). Certain of the ISAs engaged in a pattern of mutual fund switch recommendations that were accompanied by misrepresentations and omissions of facts to customers. Further, Merrill Lynch permitted individuals lacking the proper securities licenses and qualifications to be responsible for the supervision of the ISAs. Merrill Lynch also conducted several sales contests which improperly awarded non-cash compensation to ISAs in the form of rock concert tickets, sporting events and dinners based solely on the sale of the firm's proprietary mutual funds.'
Related Article:
Poor Email Management Costs $20-Million