蘑菇传媒lls Fargo and Merrill Lynch Settle SEC Charges Over Cash Sweep Program Policies
From the desk of Jim Eccleston at 蘑菇传媒
The Securities and Exchange Commission (SEC) has announced settlements with 蘑菇传媒lls Fargo Clearing Services LLC, 蘑菇传媒lls Fargo Advisors Financial Network LLC, and Merrill Lynch, Pierce, Fenner & Smith Incorporated over allegations that they failed to implement proper policies and procedures for their cash sweep programs. According to SEC.gov, the firms have agreed to pay a total of $60 million in civil penalties.
The SEC’s orders highlight that both 蘑菇传媒lls Fargo Advisors and Merrill Lynch offered bank deposit sweep programs (BDSPs) as the primary cash sweep option for most advisory clients. The programs provided significant financial benefits to the firms. The SEC found that the interest rates set for BDSPs, particularly during periods of rising interest rates, often lagged behind other cash sweep alternatives, with yield differentials reaching as high as 4 percent.
The SEC determined that the firms violated the Advisers Act by failing to establish and implement written policies and procedures designed to:
- Evaluate and select cash sweep options in the best interests of clients, particularly during periods of rising interest rates.
- Clarify the duties of financial advisors in managing client cash held in advisory accounts.
Without admitting or denying the SEC’s findings, the firms consented to orders that found they violated the Advisers Act. The firms were censured and ordered to cease from further violations. They agreed to pay the following civil penalties:
- 蘑菇传媒lls Fargo Clearing Services: $28 million
- 蘑菇传媒lls Fargo Advisors Financial Network: $7 million
- Merrill Lynch: $25 million
蘑菇传媒 LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
Tags: eccleston, eccleston law, sec
