Bank of America’s Merrill Lynch unit agreed to pay about $6m
to settle Financial Industry Regulatory Authority allegations that it improperly
sold shares in initial public offerings to industry insiders, the
industry-backed regulator said on Thursday.
Merrill Lynch made at least 1 462 prohibited sales in 325 different offerings from 2010 through March of this year in IPOs including those of Facebook, General Motors, LinkedIn and Twitter, Finra said in a statement. The company agreed to resolve the case without admitting or denying wrongdoing.
More than 100 different Merrill employees sold the shares to insiders including immediate family members and customers of other brokerage firms, Finra said. The regulator said the company lacked supervisory systems that could have prevented the conduct.
"IPO shares sold to industry insiders are unavailable to investors who might otherwise have purchased them," Susan Schroeder, Finra’s executive vice president in Department of Enforcement, said in the statement.
"Merrill Lynch knew or should have known that these customers were restricted from IPO purchases, but repeatedly sold them shares in violation of FINRA rules."