Since 2018, when the SEC launched its progressive whistleblower initiative to waive fines against those that come forward with information regarding misconduct, a wave of sanctions have been levied against some of the world’s top firms. Heading the compliance crackdown is the Financial Industry Regulatory Authority (FINRA), whose efforts back in 2015 prompted the SEC’s program. The regulators have ordered five brokerage firms to reimburse clients more than $18 million after exposing their routine neglect to give proper discounts. FINRA has yet again made headlines with allegations that Bank of America Corp (BAC.N) knowingly overcharged numerous customers on mutual funds to the tune of several million dollars.
Bank of America Corp agreed to pay $7.23 million in restitution and interest to settle. On Thursday, FINRA said that the accord resolves charges against the bank’s Merrill Lynch unit for relying on defective procedures that caused 13,328 customer accounts to incur unnecessary sales charges and secondary fees from April 2011 to April 2017. Investigators discovered that some eligible customers did not receive waivers of front-end sales charges when they purchased fund shares after previously selling shares from the same fund family. Others failed to receive rebates of back-end sales fees. Merrill Lynch did not admit or deny wrongdoing.
The Financial Industry Regulatory Authority commented that the accord reflected Merrill Lynch’s “extraordinary” cooperation, including its proactive hiring of an outside consultant to locate impacted customers and repay restitution. However, this is not the only time the two have locked horns. In 2014, FINRA ordered Merrill Lynch to pay $8 million in fines and an additional $24.4 million in restitution to settle charges that it failed to waive mutual fund sales fees on more than 47,000 accounts for retirement plans and charitable entities.