By Jonathan Stempel
NEW YORK (Reuters) – Bank of America Corp’s Merrill Lynch unit will pay nearly $ 11.7 million to resolve allegations it overcharged clients who invested in mutual funds, a American regulator.
The payment includes a fine of $ 3.25 million and $ 8.44 million in restitution, according to the Financial Industry Regulatory Authority. Merrill neither admitted nor denied the wrongdoing in agreeing to settle.
A unitary investment trust, or UIT, allows people to invest in a single public offering in a portfolio of securities, usually stocks and bonds. Unlike a mutual fund, a trust matures on a specific date and pays investors the proceeds from the securities it holds.
According to FINRA, Merrill did not detect that between 2011 and 2015, its financial advisers sold $ 2.5 billion of their clients’ ITUs more than 100 days before due dates and used some or all of the product to buy new UITs.
He said the early renewals may have caused more than 3,000 customers selling costs that they would have avoided if they had kept their ITUs to maturity. Many newly purchased UITs used the same strategies as sold UITs, he added.
Bank of America spokeswoman Alliccia Hernandez said Merrill addressed FINRA’s concerns by improving its surveillance system.
(Reporting by Jonathan Stempel in New York; editing by Jonathan Oatis)