As reported June 14 by Investment News, the settlement agreement between Merrill and FINRA was reached June 11. According to FINRA, Merrill did not have an automated compliance reporting system in place to flag potentially unsuitable concentrations of structured products in customer accounts from 2006 through March 2009.
During that time, FINRA says Merrill’s customers made 650,000 purchases of structured products. More than half of the products were issued by Merrill’s parent company.
Because structured products are unsecured debt obligations of the issuing firm, customers face an “issuer risk,” FINRA contends, a fact that “underscores the importance of ensuring that customers invest only an appropriate amount of their assets in such products.”