The Financial Industry Regulatory Authority has slapped Merrill Lynch, Pierce Fenner & Smith Inc. with a censure and a $150,000 fine for allowing an executive with its non-Finra member affiliate to preside over its prime brokerage department without being registered with Finra.
Merrill Lynch, without admitting or denying the findings, accepted a consent agreement that stated that from April 2016 through the present, Merrill Lynch violated its rules of conduct by permitting the individual to act as a principal of the firm without ensuring the individual was registered in that role with Finra, the self-regulatory organization said.
The individual actively engaged in the management of Merrill Lynch’s prime brokerage business in the U.S. and exercised overall managerial decision-making authority, Finra said. Specifically, it said the individual directly supervised more than 25 U.S.-based prime brokerage employees, all but one of whom were registered with Finra. In that role, the individual wrote annual performance reviews for registered employees and, relatedly, made decisions on registered persons’ compensation; interviewed and hired candidates to fill open prime brokerage positions; and promoted and demoted, and changed the job functions of, prime brokerage employees, Finra said.
Finra said the individual also served as a voting member of pricing and commitment committees; ran weekly sales meetings of the prime brokerage sales group; solicited business from customers and prospective clients; and approved the onboarding of at least one customer.