- FAB granted commercial banking licence in Saudi Arabia
- Chip and pin cards remain UK consumers’ first choice for payments
- New Payment System Operator appoints key advisory councils
- A.W. Jones launches wealth advisory boutique
- Self-regulation could reinvigorate cryptocurrency, says Baldwin Global
- Mid-sized UK businesses investing in green initiatives benefit commercially, says Barclays
- OakNorth reports £10.6m profit as it pursues plans to lend a further £1bn to UK businesses expired
- New members join Committee on Payments and Market Infrastructures expired
- Allianz X co-leads European mobile bank N26's Series C round expired
- UK Finance welcomes transitional arrangement for Brexit expired
- Women in banking sector face a ‘double glass ceiling’, says study expired
- Bolero International wins Asia supply chain finance strategy award expired
13th March 2018
Merrill Lynch charged with gatekeeping failures in the unregistered sales of securities
The Securities and Exchange Commission (SEC) has settled charges against Merrill Lynch, Pierce, Fenner & Smith Inc. for its failure to perform required gatekeeping functions in the unregistered sales of securities on behalf of a China-based issuer and its affiliates.
The SEC’s order found that Merrill Lynch sold almost three million shares of Longtop Financial Technological Limited’s securities into the market despite red flags indicating that the sales could be part of an unlawful unregistered distribution. Ultimately, the distribution generated almost $38m in proceeds for the overseas issuer and its affiliates.
“Broker-dealers are important gatekeepers,” said Antonia Chion, Associate Director of the SEC’s Division of Enforcement. “A broker-dealer has a duty to conduct a reasonable inquiry and know its customers before effecting unregistered sales of securities.”
The SEC’s order found that Merrill Lynch violated Sections 5(a) and 5(c) of the Securities Act of 1933. In settlement, without admitting or denying the SEC’s findings, the firm agreed to be censured and consented to the order requiring it to cease and desist from committing or causing any future violations of the registration provisions of the Securities Act.
The order also requires Merrill Lynch to pay a penalty of $1.25m and more than $154k in disgorgement and prejudgment interest from commissions and fees earned on the improper sales. The SEC has revoked the registration of Longtop’s securities.