The Financial Industry Regulatory Authority,
Wall Street's self-funded regulator, on Monday said the
restitution is in addition to $64.8 million that Merrill has
already repaid, making the total payout about $97.2 million
including the fine.
Like many rivals, Merrill has offered mutual fund shares in
multiple classes. Typically, Class A shares carry lower fees
than Class B and C shares, but also carry upfront sales charges.
FINRA said Merrill failed to provide promised sales charge
waivers on many retirement accounts for more than five years
beginning in January 2006, relying instead on financial advisers
it did not properly supervise to do so.
As a result, about 41,000 small business retirement plans, and
6,800 charities and 403(b) retirement plan accounts available to
ministers and public school employees, improperly paid sales
charges on Class A shares or bought other share classes carrying
higher fees, FINRA said.
Roughly 16,200 of these accounts will share in the $24.4 million
payout, settlement papers show.
"Investors must be able to trust that their brokerage firm will
offer the lowest-cost share classes available to them," FINRA
enforcement chief Brad Bennett said in a statement.
Merrill neither admitted nor denied FINRA's charges in agreeing
to settle.
A spokesman, Bill Halldin, said Merrill notified FINRA and
voluntarily began making refunds after discovering the matter,
which did not affect individual brokerage accounts or individual
retirement accounts.
Bank of America is based in Charlotte, North Carolina, and
bought Merrill on Jan. 1, 2009.
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