SEC Charges Merrill Lynch and Parent Company for Failing to File Suspicious Activity Reports
Merrill Lynch and its parent company BAC North America Holding Co. (BACNAH) were charged by the SEC for failing to file hundreds of Suspicious Activity Reports (SARs) from 2009 to 2019, resulting in a $6 million penalty and a separate $6 million fine to settle parallel FINRA charges.
Merrill Lynch and BACNAH were charged with violating the books and records provisions of the Securities Exchange Act of 1934 by failing to file hundreds of required SARs. The companies improperly used a $25,000 reporting threshold instead of the mandatory $5,000 threshold, preventing the identification of suspicious transactions potentially linked to criminal activity. Merrill Lynch agreed to pay a $6 million civil penalty to settle the SEC charges and a separate $6 million fine to settle parallel FINRA charges.
The Securities and Exchange Commission (SEC) charged Merrill Lynch, Pierce, Fenner & Smith Incorporated and its parent company BAC North America Holding Co. (BACNAH) with failing to file hundreds of required Suspicious Activity Reports (SARs) between 2009 and 2019. The companies improperly used a $25,000 transaction threshold instead of the mandated $5,000 threshold, preventing the identification of suspicious transactions potentially linked to criminal activity. This failure violated Section 17(a) of the Securities Exchange Act and Rule 17a-8, as BACNAH was responsible for overseeing SAR policies and filings. To settle the charges, Merrill Lynch agreed to pay a $6 million SEC penalty and a separate $6 million FINRA fine, while both entities agreed to cease and desist and accepted a censure without admitting or denying the allegations. The SEC emphasized the critical obligation of broker-dealers to report suspicious activity and noted the failure undermined anti-money laundering safeguards. The investigation was led by the SEC’s Los Angeles Regional Office with assistance from FINRA.
Exhibits & Attached Documents (1)
Extracted insights
- $6.00M $6 million $1M–$10M
- $25K $25,000 $10K–$100K
- $5K $5,000 <$10K
- person finola h. manvelian
- person merrill lynch
- agency sec investigation
- agency Securities and Exchange Commission
- SEC Announced Charges Against Merrill Lynch, Pierce, Fenner & Smith Incorporated and BACNAH
- Merrill Lynch Agreed To Pay $6 Million Penalty
- Merrill Lynch Agreed To Pay $6 Million Fine
- BACNAH Assumed Responsibility For Creating and Implementing Merrill Lynch's SAR Policies
- BACNAH Improperly Used $25,000 Threshold
- BACNAH Caused Merrill Lynch's Failure To File SARs
- Merrill Lynch and BACNAH Did Not File Hundreds of Merrill Lynch SARs
- Merrill Lynch Violated Books and Records Provisions
- BACNAH Caused Violations
- Merrill Lynch and BACNAH Agreed To Cease and Desist Violations Of Provisions
- Finola H. Manvelian Supervised SEC Investigation
The Securities and Exchange Commission today announced charges against Merrill Lynch, Pierce, Fenner & Smith Incorporated and its parent company BAC North America Holding Co. (BACNAH) for failing to file hundreds of Suspicious Activity Reports (SARs) from 2009 to late 2019. Merrill Lynch agreed to pay a $6 million penalty to settle the SEC charges and, in a parallel action, Merrill Lynch agreed to pay a separate $6 million fine to settle charges brought by the Financial Industry Regulatory Authority (FINRA). According to the SEC’s order, BACNAH assumed responsibility for creating and implementing Merrill Lynch’s SAR policies and procedures and for filing Merrill Lynch’s SARs. Over the course of a decade, however, BACNAH improperly used a $25,000 threshold instead of the required $5,000 threshold for reporting suspicious transactions or attempted transactions where a suspect may have been seeking to use Merrill Lynch to facilitate criminal activity and could not be identified. As a result, BACNAH caused Merrill Lynch’s failure to file hundreds of required SARs. “Broker-dealers have a critical obligation to report suspicious activity in their accounts,” said Katharine E. Zoladz, Co-Acting Regional Director of the Los Angeles Regional Office. “Merrill Lynch and BACNAH did not file hundreds of Merrill Lynch SARs because they failed to comply with one of the most basic requirements for a SAR program.” The SEC’s order finds that Merrill Lynch violated the books and records provisions of Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-8 thereunder and that BACNAH caused those violations. Without admitting or denying the SEC’s findings, Merrill Lynch and BACNAH agreed to cease and desist from committing or causing violations of those provisions, and Merrill Lynch also agreed to a censure and the aforementioned $6 million civil penalty. The SEC’s investigation was conducted by staff at the Los Angeles Regional Office and supervised by Finola H. Manvelian. The SEC appreciates the assistance of FINRA.
The Securities and Exchange Commission today announced charges against Merrill Lynch, Pierce, Fenner & Smith Incorporated and its parent company BAC North America Holding Co. (BACNAH) for failing to file hundreds of Suspicious Activity Reports (SARs) from 2009 to late 2019. Merrill Lynch agreed to pay a $6 million penalty to settle the SEC charges and, in a parallel action, Merrill Lynch agreed to pay a separate $6 million fine to settle charges brought by the Financial Industry Regulatory Authority (FINRA). According to the SEC’s order, BACNAH assumed responsibility for creating and implementing Merrill Lynch’s SAR policies and procedures and for filing Merrill Lynch’s SARs. Over the course of a decade, however, BACNAH improperly used a $25,000 threshold instead of the required $5,000 threshold for reporting suspicious transactions or attempted transactions where a suspect may have been seeking to use Merrill Lynch to facilitate criminal activity and could not be identified. As a result, BACNAH caused Merrill Lynch’s failure to file hundreds of required SARs. “Broker-dealers have a critical obligation to report suspicious activity in their accounts,” said Katharine E. Zoladz, Co-Acting Regional Director of the Los Angeles Regional Office. “Merrill Lynch and BACNAH did not file hundreds of Merrill Lynch SARs because they failed to comply with one of the most basic requirements for a SAR program.” The SEC’s order finds that Merrill Lynch violated the books and records provisions of Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-8 thereunder and that BACNAH caused those violations. Without admitting or denying the SEC’s findings, Merrill Lynch and BACNAH agreed to cease and desist from committing or causing violations of those provisions, and Merrill Lynch also agreed to a censure and the aforementioned $6 million civil penalty. The SEC’s investigation was conducted by staff at the Los Angeles Regional Office and supervised by Finola H. Manvelian. The SEC appreciates the assistance of FINRA.