Article: Merrill Lynch fined by Seoul authority for profiteering from spoofing

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Merrill Lynch fined by Seoul authority for profiteering from spoofing

Chung Seung-hwan, Choi Mira

Pulse, 17 July 2019

South Korea’s stock exchange authority Korea Exchange (KRX) slapped a fine of 175 million won ($148,242) on U.S. brokerage Bank of America Merrill Lynch for violating domestic rules and distorting market through algorithmic high-frequency spoofing.

Merrill Lynch has been accused of abetting 6,200 spoofing activities while handling 80 trillion won worth deals commissioned by American hedge fund Citadel Securities from October 2017 to May 2018. Over the period, Citadel was found to have profiteered about 220 billion won, according to KRX.

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Article: Chat room messages are ‘smoking gun’ in $25 million Merrill CFTC spoofing penalty

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Chat room messages are ‘smoking gun’ in $25 million Merrill CFTC spoofing penalty

Todd Ehret

Reuters, 17 July 2019

The U.S. Commodities Futures Trading Commission (CFTC) last month chalked up another impressive settlement over the market manipulation tactic known as “spoofing.” The $25 million penalty for Merrill Lynch Commodities in the case is the second largest related to spoofing.

Like many of the prior cases, where the firms cooperated with the investigations and were given credit for doing so, the proverbial “smoking gun” in the case was the record of online chat rooms where traders discussed markets, prices, and their strategies and actions.

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Article: Bank Of America, Morgan Stanley Again Accused Of Spoofing

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Bank Of America, Morgan Stanley Again Accused Of Spoofing

Rachel Graf

Law360, 12 July 2019

Morgan Stanley & Co. LLC, Bank of America Corp. and its subsidiary Merrill Lynch Commodities Inc. engaged in spoofing in an effort to manipulate precious metals futures, according to a proposed class action filed Friday in New York federal court.

Three New York investors claim the banks, two former Merrill Lynch traders and 18 unnamed individual defendants manipulated gold, silver, platinum and palladium futures through a spoofing scheme in which they placed buy or sell orders that they intended to cancel. The practice simulates supply or demand, allegedly allowing the banks to profit from the swings in prices.

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Article: Merrill Lynch Pays $36.5 Million to Settle Spoofing Charges

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Merrill Lynch Pays $36.5 Million to Settle Spoofing Charges

Aziz Abdel-Qader

Finance Magnates, 26 June 2019

Merrill Lynch Commodities, Inc. (MLCI) has just settled spoofing charges with the Commodity Futures Trading Commission (CFTC) by agreeing to pay a combined $36.5 million. The CFTC action centered on spoofing activity carried out by Bank of America’s global commodities trading business in a scheme that ran from 2008 through 2014 and involved dozens of fraudulent orders that were canceled before execution.

MLCI precious metals traders are accused of working with other traders to rig the purchase and sale of futures contracts on the Chicago Mercantile Exchange and the Chicago Board of Trade.

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Article: South Korea exchange ups scrutiny of Merrill Lynch trading

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South Korea exchange ups scrutiny of Merrill Lynch trading

Song Jung-a, Emma Dunkley

Financial Times, 21 August 2018

South Korea’s stock exchange has stepped up its monitoring of high-frequency trading by the Seoul branch of Bank of America Merrill Lynch after local investors complained about alleged unfair stock trades by the US brokerage.

The scrutiny comes after individual local investors filed petitions to the presidential office, saying they suffered huge losses due to large, high-frequency trades and bets against South Korean stocks through the brokerage since last year.

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Article: FINRA fines Merrill Lynch $2.8 million for reporting violations

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FINRA fines Merrill Lynch $2.8 million for reporting violations

Elizabeth Dilts

Reuters, 18 October 2016

The Financial Industry Regulatory Authority fined Bank of America’s Merrill Lynch $2.8 million on Tuesday for what it called systemic violations in record-keeping and how the firm reported trades and order audit trail system data.

The allegations involve trade and order audit data that brokerages submit to FINRA, and which the regulator uses to detect, among other things, possible market manipulation.

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Filing: SEC v Merrill Lynch

Filing

SEC v Merrill Lynch

23 June 2016

Broker-dealers are required to be diligent stewards of the cash and securities entrusted to them by their customers. This basic principle is embodied in Exchange Act Rule 15c3-3, known as the Customer Protection Rule (“Rule”). The Rule requires broker-dealers to safeguard both the cash and securities of their customers so that customer assets can be quickly returned if the firm fails. In broad strokes, a broker-dealer cannot use customer assets to finance the business activities of the firm, and it cannot place customer assets in locations or accounts that make them vulnerable to claims made against the broker-dealer by third parties.

PDF (23 pages): SEC v Merrill Lynch

 

Article: SCOTUS Send Merrill Lynch Case to NJ State

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SCOTUS Send Merrill Lynch Case to NJ State

Adam Klasfeld

Courthouse News Service, 16 May 2016

Merrill Lynch and other brokerage firms must face a state court case that says illegal naked short sales cost investors more than $800 million, the U.S. Supreme Court ruled Monday.

The shareholders brought their case four years ago in New Jersey over the Fortune 500 memorabilia company Spectrum Group International, then known as Escala Group.

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Article: BofA’s Merrill fined $11m over short selling

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BofA’s Merrill fined $11m over short selling

Ben McLannahan

Financial Times, 1 June 2015

The Securities and Exchange Commission has fined Bank of America’s Merrill Lynch unit $11m for failing to keep proper records of stock available to borrow, after irregular trades were carried out over at least six years.

The case relates to short selling — or betting that the price of a stock will fall — in which investors such as hedge funds ask their brokers to find stock to borrow, which they then sell, hoping to buy it back later for less.

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