sec merrill lynch enforcement action June 23, 2016Posted by Bradley in : compliance , add a comment
Merrill Lynch does “wealth management and financial services.” Today the home page of this wealth management website states “Life. It’s a totally different beast.TM” I have no idea what that is supposed to mean. But probably most clients and prospective clients don’t expect that Merrill Lynch would be playing games with their money.
From the SEC’s Press Release:
Merrill Lynch violated the SEC’s Customer Protection Rule by misusing customer cash that rightfully should have been deposited in a reserve account. Merrill Lynch engaged in complex options trades that lacked economic substance and artificially reduced the required deposit of customer cash in the reserve account. The maneuver freed up billions of dollars per week from 2009 to 2012 that Merrill Lynch used to finance its own trading activities. Had Merrill Lynch failed in the midst of these trades, the firm’s customers would have been exposed to a massive shortfall in the reserve account…. Merrill Lynch further violated the Customer Protection Rule by failing to adhere to requirements that fully-paid for customer securities be held in lien-free accounts and shielded from claims by third parties should a firm collapse. From 2009 to 2015, Merrill Lynch held up to $58 billion per day of customer securities in a clearing account that was subject to a general lien by its clearing bank and held additional customer securities in accounts worldwide that similarly were subject to liens. Had Merrill Lynch collapsed at any point, customers would have been exposed to significant risk and uncertainty of getting back their own securities.
Not only did the firm breach customer protection rules, but (in violation of other rules) it provided in severance agreements that employees could not provide information to the SEC. Notably the SEC is also taking action against the firm’s Head of Regulatory Reporting at the time, Bill Tirrell (and there is to be a litigated proceeding). Tirrell has had a long career in compliance at Merrill Lynch. The SEC states that “Tirrell worked in MLPF&S’s Regulatory Reporting Department from November 1980 to April 2016.” SIFMA has this bio of Mr Tirrell:
Mr. William (Bill) Tirrell is a Managing Director at Bank of America Merrill Lynch and Head of US Broker Dealer/FCM Regulatory Reporting. Mr. Tirrell is a former President of SIFMA’s Financial Management Society and currently serves as an advisor to the FMS Board. Mr. Tirrell is a member of the FMS National Conference Committee and chairs SIFMA’s Capital Steering Committee and the Regulatory Capital and Margin Committee.
In March 2016 he participated in a CFTC Roundtable on issues relating to futures commission merchants (at p. 58):
I think we’re starting to get fairly comfortable with the new regulations, and the implementation of those, and operationally and practically making those work.
is there a connection between advertising and rule-breaking? November 8, 2014Posted by Bradley in : compliance , add a comment
This Lexus Ad suggests to me that there may be. The voiceover begins:
Limits are there to be shattered. Barriers are meant to be broken. Lines are drawn to be crossed
corporations compliance and crimes July 19, 2011Posted by Bradley in : compliance , add a comment
The UK Parliament’s Commons Culture, Media and Sport Committee is taking evidence from Rupert and James Murdoch. The two don’t seem to be selling quite the same story all the time. But James Murdoch, while emphasizing News Corporation’s code of conduct which prohibits criminal activity by employees, suggested that the senior executives of the corporation couldn’t be expected to know about employees’ criminal activities. He admitted that denials in 2009 had been more emphatic than was justified by the facts. But he seemed to think it was reasonable for an organization to discover facts about its own conduct in the course of litigation. All this raises some big questions about whether some large corporate organizations are really too big to comply with the law.