Merrill Lynch fined £13.2m by FCA for reporting failures

Investment bank Merrill Lynch International has been fined £13.2m by the FCA for failures related to reporting transactions

Investment bank Merrill Lynch International has been fined £13.2m by the Financial Conduct Authority (FCA) for failures related to reporting transactions.

The company was found to have incorrectly reported more than 35 million transactions and failed to report a further 121,387 between November 2007 and November 2014.

The fine is the FCA’s largest ever for reporting failures and the authority described it as “a reflection of the severity of Merrill Lynch International's misconduct, failure to adequately address the root causes over several years despite substantial FCA guidance to the industry, and a poor history of transaction reporting compliance, consisting of a private warning issued in 2002 and a fine of £150,000 in 2006”.

The penalty equated to £1.50 per line of incorrect or non-reported data, rather than the £1 per line used in the three most recent transaction reporting cases. The FCA said this is “because past fines have not been high enough to achieve credible deterrence”.

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Georgina Philippou, the FCA's acting director of enforcement and market oversight, said proper transaction reporting really matters. 

“Merrill Lynch International has failed to get this right again – despite a private warning, a previous fine, and extensive FCA guidance and enforcement action in this area,” she said.

“The size of the fine sends a clear message that we expect to be heard and understood across the industry. Accurate and timely reporting of transactions is crucial for us to perform effective surveillance for insider trading and market manipulation in support of our objective to ensure that markets work well and with integrity.”

The bank received a 30% reduction in its overall fine because it settled early.

An IT professional in the investment banking sector said trading systems are set up to automatically report transactions. 

“For this to happen could be system failure or because of manual intervention when trades go wrong,” he said.

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