Merrill Lynch has signed consent orders agreeing to pay fines stemming from telemarketing violations by the company, according to AdvisorHub.
Under the settlements reached with the Financial Industry Regulatory Authority and state regulators in New Hampshire, Merrill Lynch will pay fines totaling $1.4 million while also agreeing to a censure.
The cases involve allegations by the agencies that from 2018 to 2020, Merrill Lynch trainees placed thousands of cold calls to phone numbers that were on the national do-not-call registry and the firm’s own do-not-call list.
According to FINRA, Merrill Lynch did not establish and maintain a supervisory system that was reasonably designed to prevent these calls. The New Hampshire regulators made similar allegations against the company.
FINRA noted that despite the firm’s policy of not calling numbers on the do-not-call lists, Merrill Lynch did not provide adequate oversight of calls. During monthly telemarketing compliance reviews of 200 randomly chosen trainees, officials did not consider numbers that trainees called but didn’t log as being prospective clients within its content management system. A former employee brought the issue to the company’s attention in 2019.
Merrill Lynch was found to be in violation of several FINRA rules, including Rule 3230 stating that brokers are barred from calling any person that previously has stated they do not wish to receive an outbound telephone call made by or on behalf of the member, or any person who has registered their telephone number on the Federal Trade Commission’s national do-not-call registry.
Other violations involved Rule 3100 requiring broker-dealers to establish and maintain supervisory system reasonably designed to achieve compliance and Rule 2010 requiring firms to maintain high standards of commercial honor.
Under the FINRA settlement, Merrill Lynch agreed to pay $700,000 in fines without admitting or denying the findings. In the New Hampshire case, the firm will pay a fine of $650,000 and $50,000 for the costs of the investigation.
A spokesperson for Merrill Lynch said that upon being notified of the issues involving its trainees, the firm conducted an internal review, reported its conclusions to FINRA and enhanced its supervision and training.
At Lewitas Hyman, our attorneys fully understand the regulatory scrutiny financial professionals and their firms face from the various regulators that oversee the financial services industry. We have decades of experience representing clients with respect to examinations, investigations and enforcement proceedings initiated by the SEC, FINRA, state securities regulatory agencies and other self-regulatory organizations. If your firm is facing an investigation from a regulatory agency, please contact Lewitas Hyman at (888) 655-6002 or through our online contact form.