Merrill Lynch to Pay $415 Million to Settle SEC Investigation

The U.S. Securities and Exchange Commission announced on Thursday that Bank of America Corporation (NYSE: BAC)’s unit, Merrill Lynch, is going to pay $415 million to settle accusation form SEC for misusing clients’ money.

According to SEC announcement, an investigation found that Merrill Lynch violated the SEC rule that protect customers’ assets by misusing customer’s cash that should have been deposited in a reserve account. The manipulation released billions of dollars every week from 2009 to 2012 that Merrill Lynch used to finance its own trading activities.

“While no customers were harmed and no losses were incurred, our responsibility is to protect customer assets and we have dedicated significant resources to reviewing and enhancing our processes,” a Bank of America spokesperson said. “The issues related to our procedures and controls have been corrected.”

However, “if Merrill Lynch’s business failed during those trades, customers would have been exposed to a massive shortfall in the reserve account.” the SEC said.

Merrill Lynch said it fully cooperated with SEC staff in this case and the settlement would have no effect on the second quarter results.

In conjunction with this case, the SEC announced a two-part initiative designed to uncover additional abuses of the Customer Protection Rule, encouraging broker-dealers to proactively report potential violations of the rule to the SEC and providing for favorable settlement terms in any enforcement recommendations arising from self-reporting. The SEC will also conduct examinations of certain broker-dealers to assess their compliance with the Customer Protection Rule.

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