Merrill Lynch Fires Two Employees for Selling Unapproved Products

Leading financial services firm Merrill Lynch dismissed two employees on grounds that they broke a major industry rule of selling products that weren’t approved by the company.

Merrill Lynch, a unit of Bank of America, is one of the world’s biggest brokerages. The firm laid off two brokers who worked at its Private Banking and Investment Group for selling funds that were outside Merrill Lynch’s scope, a major breach that has severe consequences. This practice is known as “selling away” and considered a major breach by financial industry watchdogs. It involves selling investment or such related products that aren’t approved or managed by the firm in question.

The two brokers, James P. Goetz and Stephen S. Brown, managed nearly $2.5 billion worth of client assets and were based in New York. They had worked at the firm for many years; with Mr. Brown having worked since 1991, while Mr. Goetz has been with the firm since 1998.

Regulators have recently stepped up their investigations in order to weed out any cases of “selling away”. For example, on March 10, this year, the Financial Industry Regulatory Authority (FINRA) found U.S. citizen Larry Steven Werbel guilty of selling away.

Meanwhile, specialist technology services firm B-Next launched “CMC: Benchmark Fixing Analysis” as it seeks to help regulators and financial services firms eliminate market fixing and abuse when setting benchmarks such as LIBOR and FX.

The company’s Capital Markets Compliance (CMC) package is integrated compliance software that can be used to spot conflict of interest, insider trading and market abuse. It can also help track Derivatives/OTC markets and assist compliance officials to check that full disclosure and ethical trade execution is implemented all the time.