- Bank of America (BAC -0.1%) Merrill Lynch admits wrongdoing in misleading customers about how it handled their orders and agrees to pay $42M penalty, the U.S. Securities and Exchange Commission reports.
- Merrill Lynch admitted to a practice called "masking," when it tells customers that it executed millions of orders internally, but had actually routed them for execution at other broker-dealers, including proprietary trading firms and wholesale market makers, according to the SEC order.
- Masking entails reprogramming Merrill's systems to falsely report execution venues, altering records and reports, and providing misleading responses to customers.
- "By masking the broker-dealers who had executed customers’ orders, Merrill Lynch made itself appear to be a more active trading center and reduced access fees it typically paid to exchanges," the SEC statement said.
- Even after Merrill stopped masking in May 2013, it took additional steps to hide its past practice, says the SEC.
- Previously: JPMorgan (NYSE:JPM) to pay $65M penalty for attempted ISDAFIX swap rate manipulation (June 18)
- Now read: Bank Of America: Into The Home Straight?
Original article