Bank of America Merrill Lynch Again Fails to Protect Clients

April 2, 2018

Bank of America Merrill Lynch reached a settlement with the state of New York to pay a $42 million fine for having a secret agreement to route client orders to high-frequency trading (HFT) firms. HFT firms can adjust price quotes resulting in the investor getting worse price execution on a trade.  Approximately four billion shares were traded without telling clients the trades were routed to HFT firms.  This comes less than two years after Merrill Lynch settled with the U.S. Securities and Exchange Commission (SEC) and paid $415 million and admitted wrongdoing for putting client securities at risk.  It “misused customer cash to generate profits for the firm and failed to safeguard customer securities from the claims of its creditors.” Up to $58 billion a day was left exposed to creditor claims.

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