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Broker-Dealer Settles Charges for Failure to Supervise RMBS Traders and Salespersons

A broker-dealer agreed to pay approximately $15 million to settle SEC charges of failing to supervise residential mortgage-backed securities ("RMBS") traders and salespersons.

According to the Order, employees of the broker-dealer Merrill Lynch, Pierce, Fenner & Smith Inc. ("Merrill Lynch") (i) misled their customers into overpaying for RMBS and (ii) profited from undisclosed commissions. Although Merrill Lynch had the policies and supervisory means in place to manage this, the SEC alleged that it failed to implement its procedures appropriately.

Merrill Lynch will pay civil penalties of approximately $5.2 million and repay approximately $10 million to its customers.

Primary Sources

  1. SEC Press Release: SEC Charges Merrill Lynch for Failure to Supervise RMBS Traders
  2. SEC Order: Merrill Lynch, Pierce, Fenner & Smith Inc.

Related Articles

  • Federal Judge Denies Motion to Dismiss RMBS Fraud Suit

    A federal judge denied a motion to dismiss fraud charges brought by the SEC against a former trader. The SEC alleged that the trader misled customers in connection with costs of certain residential mortgage-backed securities.

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Tags

Regulated Activities
Supervision / Compliance Fees to Customers
Regulated Entities
Broker-Dealers
Regulated Products
ABS
Body of Law
Securities Law
Jurisdiction
US - Federal
Organization
SEC