The Financial Industry Regulatory Authority (FINRA) has fined Merrill Lynch $1.4 million for violating the do-not-call list rules. Merrill Lynch agreed to a censure and to pay the fines based on allegations by the FINRA and New Hampshire state regulators.
According to AdvisorHub, the violations occurred between 2018 and 2020. They involved trainees at several Merrill Lynch call centers who made over 7 million telemarketing calls to individuals on the National Do-Not-Call Registry or had previously asked not to receive calls from the company. Merrill Lynch's parent company, Bank of America, self-reported the violations to FINRA after discovering them through internal reviews and took corrective actions to prevent similar violations from occurring.
According to FINRA, Merrill trainees were instructed to avoid calling do-not-call registrants "unless they received and documented affirmative consent" from the call recipient. Merrill also conducted random monthly reviews of 200 trainees for compliance. However, that effort failed to reach FINRA's reasonableness of supervision threshold. Trainees could also circumvent reviewers by failing to enter the number into that system.
Merrill Lynch, through its trainees and its inadequate supervision, violated FINRA Rules 3230, 3100, and 2010. The rules, respectively, bar advisor from calling have previously stated or registered with the Federal Trade Commission that they don't want unsolicited telemarketing inquiries and requires broker dealers to establish and maintain a supervisory system reasonably designed to achieve compliance. Rule 2010 specifically calls for high standards of commercial honor by FINRA members.
Financial services firms are required to protect consumers' privacy and respect their preferences, and failure to do so can result in significant fines and reputational damage. It also underscores the importance of self-reporting and corrective actions, which can help mitigate the severity of the consequences and demonstrate a commitment to compliance and ethical behavior.
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