In what has clearly just become a cost of doing business, Bank of America Merrill Lynch was fined 13.2 million pounds ($20 million) by Britain’s markets regulator for failing to report transactions properly over seven years. The fine is the latest in a long line of sanctions against the too big to fail banks, who seemingly operate with wanton disregard for the law.
The Financial Conduct Authority (FCA) said on Wednesday that Bank of America’s Merrill Lynch’s International arm incorrectly reported 35 million transactions and did not report another 121,387 transactions between November 2007 and November 2014.
The reason for not reporting the transactions accurately and in a timely fashion was to facilitate insider trading, market manipulation and tax avoidance. These avenues are increasingly just lines of business for the big banks, coming on the heels of record fines against JP Morgan, Goldman, UBS, HSBC and others for similar conduct.
The record fine this time around reflected, claims the regulator, the severity of the misconduct and a failure to adequately address the root causes over several years despite substantial guidance from the regulator and a poor history of transaction reporting compliance, it added.
The bank was privately warned in 2002 and received a fine of 150,000 pounds in 2006. Clearly the bank, known for crunching numbers, determined that more money was to be made by continuing its illegal behavior despite the cost that would be incurred due to the fine.
“Proper transaction reporting really matters. Merrill Lynch International has failed to get this right again, despite a private warning, a previous fine, and extensive FCA guidance and enforcement action in this area,” said Georgina Philippou, acting head of enforcement at the FCA.
“The size of the fine sends a clear message that we expect to be heard and understood across the industry.” Or does it? The fine amount represents less than one month’s profit according to recent financial filings.
Bank of America Merrill Lynch, in what can only be described as a laughable attempt to seem like they care, said it was wholly committed to complying with all FCA requirements and stressed, despite ignoring the FCA, that it continuously sought to improve all necessary aspects of reporting.
“While regrettable, today’s decision principally refers to self identified issues which we have sought to remediate as quickly as possible. We can confirm that no clients were financially impacted as a result,” the bank said. The bank was silent on whether other market participants and the public at large were impacted, which usually tends to be the case in these matters.
The FCA said the fine equated to a mere 1.5 pounds ($2) per incorrect or non-reported data for the first time, up from a pound per line in the three most recent transaction reporting cases because those fines have not been high enough to achieve “credible deterrence”.
Good news though! Bank of America Merrill Lynch was able to obtain a 30 percent discount because it settled at an ‘early stage’.
The watchdog has, to date, fined 11 other firms for transaction reporting breaches: Deutsche Bank, Barclays, Credit Suisse, Instinet, Getco, Commerzbank, Societe Generale, City Index, James Sharp & Co, Plus500UK, and Royal Bank of Scotland.
We will leave it to our readers to determine just how effective these fines seem to be.