Friday, October 23, 2009


On October 22, 2009, Missouri Secretary of State Robin Carnahan announced that Merrill, Lynch, Pierce, Fenner & Smith, Inc. (“Merrill Lynch”) will pay $367,500.00 to the Missouri Investor Education and Protection Fund for failure to comply with Missouri’s registration laws. Acting on a tip from a former Merrill Lynch employee, the firm was the subject of a multi-state investigation into its registration practices. In total, the firm has been ordered to pay more than $26.5 million in “fines, penalties and other monetary sanctions and payments to the 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.”

According to the Order, Merrill Lynch violated Missouri's securities laws by “failing to ensure that its associates were properly registered in each state where they were doing business.” Under Missouri Revised Statute § 409.4-402, “it is unlawful for an individual to transact business in this state as an agent unless the individual is registered under [the Missouri Securities Act] as an agent.” Section 409.4-402 further provides that “it is unlawful for a broker-dealer engaged in offering, selling, or purchasing securities in this state, to employ or associate with an agent who transacts business in this state on behalf of broker-dealers unless the agent is registered.”

The Order also states that Merrill Lynch violated its own written policies and procedures in failing to properly supervise its client associates. Specifically, the firm generally requires its associates to pass the series 7 and 63 qualification exams and to maintain registrations in all necessary jurisdictions.

In today’s environment of heightened scrutiny and elevated enforcement actions, it is vital for financial institutions to ensure compliance with both state and federal regulations. With that in mind, our firm has the requisite knowledge and experience to ensure that you are in compliance with applicable securities laws. Please give us a call at (314) 563-2490 before you become the subject of an enforcement action.

A complete copy of the Order can be found here.

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