“Supervisory Failures” Cost Merrill Lynch $1 Million

According to the Financial Industry Regulatory Authority (FINRA), “it has fined Merrill Lynch, Pierce, Fenner & Smith Inc., $1 million for supervisory failures that allowed a registered representative at Merrill Lynch’s branch office in San Antonio, Texas, to use a Merrill Lynch account to operate a Ponzi scheme.” Merrill Lynch has, “neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.”

According to the FINRA release, Bruce Hammonds, who was once a registered representative employed by Merrill Lynch, “…convinced 11 individuals to invest more than $1 million in a Ponzi scheme he created and ran as B&J Partnership for over 10 months.” Hammonds has since been permanently barred from the securities industry and, according to FINRA, Merrill Lynch has made restitution to those customers.

In addition to the failing to supervise Mr. Hammonds, FINRA found that Merrill Lynch’s supervisory system was not adequate for several other reasons. Primarily there were gaps in their ability to supervise employee accounts. FINRA noted that “from January 2006 to June 2010, Merrill Lynch failed to monitor an additional 40,000 employee/employee-interested accounts, which were not reported for certain periods of time and therefore not available on the supervisory system.”

If you are concerned about investments you have made with Merrill Lynch or Bruce Hammonds and would to speak to a securities attorney, please call our Chicago office at 312/238-9650.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.

For more information on The White Law Group, please visit our website at https://whitesecuritieslaw.com.