N.J. Bureau of Securities and Merrill Lynch
Reach Settlement Over Stock Trades
by Unregistered Employees
NEWARK—Merrill, Lynch, Pierce, Fenner and Smith, Inc. ("Merrill Lynch") will pay New Jersey $728,260 in civil penalties and revise its business practices to comply with state laws and regulations, under terms of an Administrative Consent Order entered today, according to Attorney General Paula T. Dow and Marc B. Minor, Chief of the New Jersey Bureau of Securities.
The settlement follows a multi-state investigation which resulted in an Administrative Consent Order between New Jersey and Merrill Lynch. According to the order, the investigation revealed that from at least January 1, 2004 through the present, Merrill Lynch employed Client Associates who conducted sales of securities in states without being registered as agents in those states as legally required. The order also sets forth that the N.J. Bureau of Securities found that Merrill Lynch failed to adequately supervise Client Associates and enforce its own established, written procedures.
"The Bureau of Securities has acted to protect investors and to ensure legal compliance by companies that operate in New Jersey," Attorney General Dow said. "This settlement underscores how vital the work of state securities regulators is, especially during these difficult financial times."
Merrill Lynch cooperated with investigators and has implemented revised business practices, including a system to monitor the status of persons who accept client orders. Approximately 700 Client Associates employed in New Jersey have been registered as agents following the investigation.
"Investors deserve and expect that their trading is being conducted by registered agents. Encouraging New Jersey investors to make sure their brokers are registered becomes meaningless if firms allow those brokers to pass off trading to employees lacking necessary registrations in the name of cutting corporate costs," Minor said.
The multi-state investigation into Merrill Lynch began in the summer of 2008.
The N.J. Bureau of Securities can be contacted toll-free within New Jersey at 1-877-I-INVEST (1-877-446-8378) or from outside New Jersey at 973-504-3600. The Bureau's web site is located at www.njsecurities.gov.