Get Our Blog
iconfinder_Contols_-_Add_On-32_2454800.p
  • Eric Hahn

Merrill Lynch to pay $415M to settle SEC charges it misused customer cash


Merrill Lynch has agreed to pay $415 million and admit wrongdoing to settle charges it misused customer cash to generate profits, according to the Securities and Exchange Commission.

“An SEC investigation found that Merrill Lynch violated the SEC's customer protection rule by misusing customer cash that rightfully should have been deposited in a reserve account,” the agency said in statement Thursday. “Merrill Lynch engaged in complex options trades that lacked economic substance and artificially reduced the required deposit of customer cash in the reserve account.”

Merrill's maneuvering freed up billions of dollars a week from 2009 to 2012, which the firm used to finance its own trading activities. Customers would have been exposed to a “massive shortfall” in the reserve account if Merrill had failed in these trades, according to the SEC.

From 2009 to 2015, Merrill Lynch also held up to $58 billion per day of customer securities in a clearing account subject to a general lien by its clearing bank. There were additional customer securities in accounts worldwide that similarly were subject to liens, the SEC said, all exposed to significant risk and uncertainty of clients getting back their own securities had Merrill collapsed.

“The rules concerning the safety of customer cash and securities are fundamental protections for investors and impose lines that simply can never be crossed,” Andrew J. Ceresney, director of the SEC's Division of Enforcement, said in the statement. “Merrill Lynch violated these rules, including during the heart of the financial crisis, and the significant relief imposed today reflects the severity of its failures.”

The agency also announced Thursday a new initiative to root out violations of the customer protection rule by other broker-dealers.

http://www.investmentnews.com/article/20160623/FREE/160629959/merrill-lynch-to-pay-415m-to-settle-sec-charges-it-misused-customer?utm_source=BreakingNews-20160623&utm_medium=email&utm_campaign=investmentnews&utm_visit=127516

#MerrillLynch

Portfolio &
Money Management

Resources

Contact Us

Headquarters:
Stamford

 

 

IMPORTANT DISCLOSURE INFORMATION   

 

ADV Part 2 | ADV Part 3 (CRS) Privacy Policy | Cyber Security Policy | Business Continuity Plan Client Secure Upload

 

Check the background of this firm on FINRA’s BrokerCheck.           

 

NS Capital LLC is a Registered Investment Adviser. NS Capital and its representatives are in compliance with the current filing requirements imposed upon registered investment advisers by those states in which NS Capital maintains clients. NS Capital may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. NS Capital’s web site is limited to the dissemination of general information pertaining to its advisory services, and through the NS Blog access to additional investment-related information, publications, and links.  Accordingly,  NS Capital’s web site on the Internet should not be construed by any consumer and/or prospective client as NS Capital’s solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet.  Any subsequent, direct communication by NS Capital with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of NS Capital, please contact the SEC or the state securities regulators for those states in which NS Capital maintains a notice filing.  A copy of NS Capital current written disclosure statement discussing NS Capital’s business operations, services, and fees is available from NS Capital upon written request. NS Capital does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to NS Capital’s web site or incorporated herein, and takes no responsibility such content.  All such information is provided solely for convenience purposes only and all users should be guided accordingly.

 

Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy (including those undertaken or recommended by NS Capital), will be profitable or equal any historical performance level(s).

 

Certain portions of NS Capital’s web site (i.e. newsletters, articles, commentaries, etc.) may contain a discussion of, and/or provide access to, NS Capital (and those of other investment professionals) positions and/or recommendations as of a specific prior date.  Due to various factors, including changing market conditions, such discussion may no longer be reflective of current position(s) and/or recommendation(s).  Moreover, no client or prospective client should assume that any such discussion serves as the receipt of, or a substitute for, personalized advice from NS Capital, or from any other investment professional. NS Capital is neither an attorney nor an accountant, and no portion of the web site content should be interpreted as legal, accounting or tax advice. 

 

Rankings and/or recognition by unaffiliated rating services and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if NS Capital is engaged, or continues to be engaged, to provide investment advisory services, nor should it be construed as a current or past endorsement of NS Capital by any of its clients.  Rankings published by magazines, and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser. Each client and prospective client agrees, as a condition precedent to his/her/its access to NS Capital web site, to release and hold harmless , NS Capital’s officers, directors, owners, employees and agents from any and all adverse consequences resulting from any of his/her/its actions and/or omissions which are independent of his/her/its receipt of personalized individual advice from NS Capital.

© 2020-2025 NS Capital LLC. All Rights Reserved.