On July 11, 2023, the SEC announced charges against Merrill Lynch, Pierce, Fenner & Smith Incorporated and its parent company BAC North America Holding Co. (BACNAH) for failing to file hundreds of Suspicious Activity Reports (SARs) from 2009 to late 2019. To settle the SEC charges, Merrill Lynch agreed to pay a $6 million penalty. Merrill Lynch also agreed to pay a $6 million fine to settle charges brought by the Financial Industry Regulatory Authority (FINRA).
As stated on the SEC’s order, BACNAH assumed responsibility for creating and implementing Merrill Lynch’s SAR policies and procedures and for filing Merrill Lynch’s SARs. However, BACNAH improperly used a $25,000 threshold instead of the required $5,000 threshold for reporting suspicious transactions or attempted transactions where a suspect may have been seeking to use Merrill Lynch to facilitate criminal activity and could not be identified. This practice resulted in failure to file hundreds of required SARs by the financial institution.
According to the SEC’s order, Merrill Lynch violated the books and records provisions of the Securities Exchange Act of 1934 and Rule 17a-8 thereunder and that BACNAH caused those violations. Without admitting or denying the SEC’s findings, Merrill Lynch and BACNAH agreed to cease and desist from committing or causing violations of those provisions, and Merrill Lynch also agreed to a censure and the aforementioned $6 million civil penalty.
Read the SEC’s announcement here.
The SEC’s order can be found here.