Merrill Lynch International fined for transaction reporting failures

Merrill Lynch International (MLI) has been fined £13,285,900 by the Financial Conduct Authority (FCA) for incorrectly reporting 35,034,810 transactions and failing to report another 121,387 transactions between November 2007 and November 2014.

The size of the fine – the highest imposed for transaction reporting failures to date – reflects the severity of MLI’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 FCA has used a penalty of £1.50 per line of incorrect or non-reported data for the first time rather than the £1.00 per line used in the three most recent transaction reporting cases because past fines have not been high enough to achieve credible deterrence.

 

Georgina Philippou, FCA 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.

“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.”

MLI agreed to settle at an early stage of the investigation, and received a 30% reduction in their overall fine. Without this discount the fine would have been £18,979,876.