Key facts
- Merrill Lynch was fined $7.5 million by the SEC for failing to file suspicious activity reports.
- The reporting failures occurred between April 2020 and September 2024.
- In a prior action, Merrill Lynch paid $6 million to the SEC and $6 million to FINRA for similar failures between 2009 and 2019.
- The company incorrectly used a $25,000 threshold for reporting suspicious transactions instead of the required $5,000.
The U.S. Securities and Exchange Commission (SEC) has fined Bank of America's Merrill Lynch unit $7.5 million for failing to file numerous suspicious activity reports (SARs) between April 2020 and September 2024. This latest penalty follows a previous action in July 2023 where Merrill Lynch and its parent company, BAC North America Holding Co., were charged for failing to file hundreds of SARs from 2009 to late 2019.
In the earlier case, Merrill Lynch agreed to pay a $6 million penalty to the SEC and an additional $6 million to the Financial Industry Regulatory Authority (FINRA). The SEC found that BACNAH, which was responsible for implementing Merrill Lynch's SAR policies, improperly used a $25,000 threshold for reporting suspicious transactions instead of the mandated $5,000. This resulted in hundreds of required SARs not being filed over more than a decade.
Regulators emphasized the critical obligation of broker-dealers to report suspicious activities. Katharine E. Zoladz, Co-Acting Regional Director of the SEC’s Los Angeles Office, stated that the failure to comply with basic SAR program requirements led to the missed filings. Merrill Lynch and BACNAH did not admit or deny the SEC's findings but agreed to cease violations and Merrill Lynch accepted a censure. A spokeswoman for Merrill Lynch indicated that the firm reported the matter to regulators following an internal review and has since enhanced its processes and training.