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Broker-Dealer Settles Charges concerning Potentially Manipulative Trading

A broker-dealer agreed to pay $125,000 to settle charges brought by eight securities exchanges for failure to prohibit potentially manipulative trading.

Eight securities exchanges settled charges with Merrill Lynch, Pierce, Fenner & Smith Inc. ("Merrill Lynch") regarding potentially manipulative trading. The exchanges allowed that, between January 2014 and December 1, 2017, Merrill Lynch did not have the necessary supervisory systems, or surveillance or written supervisory procedures, to prevent manipulative cross-product trading or mini-manipulative activity (whereby the firm's traders could move the market toward an equity security and subsequently benefit from trades in related options).

FINRA's Department of Market Regulation conducted the investigation on behalf of the various exchanges. Merrill Lynch neither admitted nor denied the charges.

Primary Sources

  1. Miami International Securities Exchange, LLC Letter of Consent: Merrill Lynch
  2. BOX Options Exchange: 2018 Disciplinary Actions - J.P. Morgan, RBC Capital Markets, Wolverine Trading, Merrill Lynch
  3. NYSE American, LLC Letter of Consent: Merrill Lynch
  4. NASDAQ GEMX Market Notice of Acceptance of Letter of Consent: Merrill Lynch
  5. NASDAQ ISE Market Notice of Acceptance of Letter of Consent: Merrill Lynch
  6. NASDAQ Options Market Notice of Acceptance of Letter of Consent: Merrill Lynch
  7. NYSE ARCA FINRA Proceeding: Merrill Lynch
  8. NASDAQ PHLX Market Notice of Acceptance of Letter of Consent: Merrill Lynch

Tags

Regulated Activities
Supervision / Compliance Trading
Sub-Activity
Spoofing / Wash Trades / Manipulation
Regulated Entities
Broker-Dealers
Regulated Products
Equities Options
Body of Law
Securities Law
Jurisdiction
US - Federal
Organization
FINRA / MSRB / SEC Exchanges / SIPC / Accountants
Sub-Author
BOX Exchange LLC, Miami International Securities Exchange LLC, Nasdaq GEMX, NASDAQ PHLX, NYSE American, NYSE Arca