FINRA Orders Merrill to Pay $11.65 Million For UIT Rollover Violations

Posted on July 8th, 2021 at 1:45 PM
FINRA Orders Merrill to Pay $11.65 Million For UIT Rollover Violations

From the Desk of Jim Eccleston at Eccleston Law:

The Financial Industry Regulatory Authority (FINRA) has ordered Merrill Lynch to pay $11.65 million as part of a settlement. FINRA alleges that the firm failed to properly supervise sales of Unit Investment Trusts between 2011 and 2015. The regulatory settlement includes a $3.25 million fine and $8.4 million in restitution to nearly 3,000 customers. According to a Letter of Acceptance, Waiver and Consent (“AWC”) issued by FINRA, thousands of customers might have paid excessive sales fees due to advisors’ recommendations that they sell their UITs prior to maturity and “roll over” the funds into another comparable investment. 

Merrill completed at least $32 billion in UIT transactions between 2011 and 2015, which includes $2.5 million worth of UITs sold at least 100 days prior to maturity, according to FINRA. Merrill’s supervisory systems did not catch the early rollovers since the systems typically generated alerts only if the UIT had been held for 120 days or less. Since 2016, FINRA and the Securities and Exchange Commission (SEC) have levied millions of dollars in fines and restitution against member firms for UIT-related supervisory failures. For example, FINRA issued fines and restitution related to UIT sales of $15 million against Raymond James Financial and $4.7 million against Oppenheimer & Co. in September 2019 and December 2019, respectively. 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.


Tags: eccleston, eccelston law, finra, merrill

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