Leading financial advisory firm, Merrill Lynch, has fired two employees who were found to have breached a major securities industry rule. Merrill Lynch, which is part of Bank of America, is one of the largest brokerage firms in the world. The news of the brokers mis-selling products that were not vetted by the firm comes as the wider financial markets environment is questioned after the Libor and FX fixing cases.
Reuters reported that Merrill Lynch had fired two brokers from its Private Banking and Investment Group who were involved in selling funds outside of Merrill Lynch’s domain, a ruling that has serious consequences if breached.
The practise known as ‘selling away’ is regarded as a major breach by regulators. It’s defined as the selling of investments or other products that are not authorised or managed under the said firm.
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The brokers in question were named as Stephen S. Brown and James P. Goetz who were based at the firm’s New York office. According to a Reuters source familiar with their practice, the two managed about $2.5 billion of assets for clients.
The two brokers were longstanding employees of the advisory firm, and according to regulatory data, Mr. Brown and Mr. Goetz had been with Merrill since 1991 and 1998, Sources stated that the two were sacked by the firm on the 9th of September.
The concept of selling away is recognised by regulators and industry professionals, and firms offering financial advice must adhere to rulings in the SEC handbook which detail what practises senior management at firms must take in order to monitor the practise.
A number of high-profile cases have been dealt with by the regulator, Financial Industry Regulatory Authority (FINRA), in relation to selling away. On March 10, 2014, US resident Larry Steven Werbel was found in breach of the rulings.