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 The Financial Conduct Authority (FCA) said on Wednesday that Bank of
America's Merrill Lynch International arm incorrectly reported 35
million transactions and failed to report another 121,387
transactions between November 2007 and November 2014.
Accurate and timely reporting of transactions was crucial for
spotting insider trading and market manipulation, the FCA said.
The record fine for reporting failures reflected the severity of the
misconduct and a failure to adequately address the root causes over
several years despite substantial guidance from the regulator and a
poor history of transaction reporting compliance, it added.
The fine follows a private warning to the bank in 2002 and a fine of
150,000 pounds in 2006.
"Proper transaction reporting really matters. Merrill Lynch
International has failed to get this right again, despite a private
warning, a previous fine, and extensive FCA guidance and enforcement
action in this area," said Georgina Philippou, acting head of
enforcement at the FCA.
"The size of the fine sends a clear message that we expect to be
heard and understood across the industry."
Bank of America Merrill Lynch said it was wholly committed to
complying with all FCA requirements and continuously sought to
improve all necessary aspects of reporting.
"While regrettable, today's decision principally refers to self
identified issues which we have sought to remediate as quickly as
possible. We can confirm that no clients were financially impacted
as a result," the bank said.
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The FCA said the fine equated to 1.5 pounds per incorrect or
non-reported data for the first time, up from a pound per line in
the three most recent transaction reporting cases because those
fines have not been high enough to achieve "credible deterrence".
Bank of America Merrill Lynch would have been fined 19 million
pounds had it not settled at an early stage to obtain a 30 percent
discount.
The watchdog has, to date, fined 11 other firms for transaction
reporting breaches: Deutsche Bank, Barclays, Credit Suisse, Instinet,
Getco, Commerzbank, Societe Generale, City Index, James Sharp & Co,
Plus500UK, and Royal Bank of Scotland.
The previous record fine for reporting breaches was 5.6 million
pounds for RBS in 2013.
($1 = 0.6663 pounds)
(Reporting by Huw Jones Editing by Carolyn Cohn and Alison Williams)
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