BofA's Merrill Lynch Commodities Agrees To Pay $25M To DOJ

The U.S. Department of Justice (“DOJ”) fined Bank of America Corporation’s (NYSE:BAC) commodities trading unit — Merrill Lynch Commodities Inc — for unfair trading practices. Merrill Lynch Commodities has agreed to pay $25 million to settle the investigations.

The DOJ said in a statement that between 2008 and 2014, Merrill Lynch Commodities’ traders used faulty practices to deceive other participants in the precious metals futures market.

Per the statement, these traders tried to inject misleading and materially fraudulent information into the precious metals futures market by placing thousands of orders for precious metals futures contracts. However, just before execution, the traders used to cancel these orders.

The main objective behind this was to create a false impression of increased supply or demand within the market for precious metals futures. This would, in turn, persuade other traders to buy or sell metals futures contracts at quantities or prices that they would not have done otherwise.

Notably, Merrill Lynch Commodities also agreed to pay a civil monetary penalty of $11.5 million to the Commodity Futures Trading Commission in a separate settlement.

Though BofA has resolved quite a many litigation issues, it still faces investigations from several federal agencies for its business conducts in the pre-crisis period. Litigation issues are expected to lead to rise in legal expenses. Hence, higher costs will likely hamper the company’s bottom line in the near future.

Shares of BofA have gained 13.9% over the past six months compared with 11.3% growth of the industry it belongs to.




Currently, the stock carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the finance space are Hilltop Holdings Inc. (NYSE:HTH) , Cadence Bancorporation (NYSE:CADE) and M&T Bank Corporation (NYSE:MTB) . Each of these stocks currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Over the past 60 days, Hilltop Holdings witnessed an upward earnings estimate revision of 7.8% for the current year. Its share price has increased 13.7% in the past six months.

Cadence Bancorporation’s Zacks Consensus Estimate for earnings in 2019 has been revised 8.8% upward over the past 60 days. Its shares have gained nearly 17.1% in the past six months.

Over the past 60 days, M&T Bank witnessed a marginal upward earnings estimate revision for the current year. Its share price has rallied 17.7% in the past six months.

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Bank of America Corporation (BAC): Free Stock Analysis Report

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