Merrill agrees to pay over $9.5 million to settle SEC charges over fee disclosures

By Chris Prentice

NEW YORK (Reuters) -Bank of America’s investment management unit has agreed to pay over $9.5 million to settle U.S. Securities and Exchange Commission charges that it failed to disclose millions of dollars of fees to clients, the regulator said on Monday.

Merrill Lynch, Pierce, Fenner & Smith Inc violated U.S. rules designed to protect investors by failing to disclose all the foreign exchange fees it was charging to clients of its investment advisory services between May 2016 and July 2020, the SEC said in a statement.

Merrill told clients that it charged a markup or markdown on foreign currency exchanges, but it did not disclose an additional fee, the SEC said. The firm also did not adopt and implement policies aimed at preventing such misleading disclosures, it said.

A spokesperson for Merrill, which did not admit or deny the SEC’s findings, noted that the firm has updated its disclosures.

Merrill charged advisory clients about $4.2 million in undisclosed fees known as “production credits” on over 15,000 foreign currency exchanges, the SEC said in a filing.

To settle the charges, the firm agreed to pay a civil penalty of $4.8 million and to give up ill-gotten gains of $4.1 million plus prejudgment interest, the SEC said.

(Reporting by Chris Prentice; Editing by Mark Porter and Anna Driver)