By Chris Prentice
(Reuters) -Merrill Lynch and two Wells Fargo advisory firms have agreed to pay a combined $60 million in civil penalties to settle U.S. Securities and Exchange Commission charges over compliance failures, the regulator said on Friday.
According to the SEC, Wells Fargo and Merrill Lynch firms failed to adopt and implement policies and procedures to consider the best interests of their clients in connection with their cash sweep programs, thus failing in their obligations to prevent violations of securities law and rules.
The firms offered bank deposit sweep programs as the only cash option for most clients, receiving a financial benefit, and failed to adopt and implement policies and procedures to consider the best interests of their clients, SEC said in a statement.
Wells Fargo and Merrill Lynch did not admit or deny the SEC’s findings.
A spokesperson for Wells Fargo, which agreed to pay $35 million across two firms, said in a statement: “Our agreement with the SEC puts this broader industry matter behind us”, noting the firm has addressed the issues.
A spokesperson for Bank of America, which owns Merrill Lynch, said the firm took “significant steps” to address the issue before learning of the SEC’s investigation.
Merrill Lynch was also one of the largest to offer a significantly higher cash sweep rate for advisory clients’ uninvested cash, the spokesperson said in the statement. Merrill Lynch agreed to pay a $25 million fine as part of the settlement with the SEC.
(Reporting By Chris Prentice in New York and Susan Heavey in Washington, Editing by Franklin Paul)
