has slapped a $5 million fine on Merrill Lynch
for its failure to put in place an adequate supervisory system at its financial advisory centers (FAC) in Hopewell, New Jersey and Jacksonville, Florida.
From 2001 to 2004, some of the firmís investment service advisors (ISAs) recommended mutual fund switches that were "accompanied by misrepresentations and omission of facts to customers," NASD said in a news release on Wednesday.
In addition, Merrill Lynch allowed individuals lacking the proper securities licenses and qualifications to be responsible for the supervision of the ISAs. The firm also staged several sales contests which improperly awarded non-cash compensation to ISAs, the regulator said.
"Regardless of the size of their brokerage account, all investors are entitled to services from registered representatives acting in their clients' best interests who are reasonably supervised by properly registered professionals," said James Shorris, NASD senior vice president and acting head of enforcement.
Merrill Lynch, he said, "failed to meet these basic standards by permitting its call center to function without proper supervisory controls, which gave rise to impermissible sales contests, unsuitable mutual fund switches and other systemic failures."
Merrill Lynch, which neither admitted nor denied any wrongdoing, was barred from holding sales contests for FAC personnel for three years. It was likewise ordered to retain an independent consultant to recommend corrective measures to improve policies and supervisory procedures for the FAC.
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