BoA Merrill Lynch Handed $12.5 Million Fine by SEC over Mini-Flash Crashes
Bank of America subsidiary fined over inadequate trading controls leading to market disruptions between 2012 and 2014.
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Bank of America Merrill Lynch (Merrill Lynch) has accepted a $12.5 million fine from the Securities and Exchange Commission (SEC) over its failure to implement adequate trading controls that caused at least 15 cases of market disruptions between late-2012 and mid-2014.
An SEC investigation found that due to its "inadequate trading controls", Merrill Lynch failed to prevent erroneous orders being sent to the markets and causing mini-flash crashes, violating the Market Access Rule.
"Mini-flash crashes, such as those caused by Merrill Lynch, can undermine investor confidence in the markets," said Andrew Ceresney, director of the SEC Enforcement Division. "It is essential that broker-dealers with market access have reasonable controls to prevent erroneous orders that disrupt trading."
The penalty, which the SEC states Merrill Lynch accepted "without admitting or denying the findings", is the largest to be imposed since a similar charge was brought against Knight Capital Americas ($12 million) in 2013.
In April last year, the UK Financial Conduct Authority (FCA) imposed a fine of £13.2 million (approximately $19.8 million) on Bank of America Merrill Lynch International (MLI) for submitting more than 35 million incorrect trading reports and failing to report another 121,387 transactions between November 2007 and November 2014.
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