Merrill Lynch to Pay $825K Over Best Execution Failures

From at least February 2017 through the present, “external investment managers, financial advisers, and customers entered equity orders into the firm’s electronic order systems,” FINRA states. “The firm performed validation checks on the orders before ultimately routing the orders to a market center for further handling and/or execution.”

During this period, Merrill’s supervisory system, including its written supervisory procedures, “was not reasonably designed to achieve compliance with the requirements of Rule 5310.01 in so far as Merrill only reviewed the execution timeliness of orders processed through the firm’s electronic order systems from the time the orders were routed to a market center for further handling or execution and the final execution time,” according to the order.

Merrill “did not conduct a supervisory review of how long it took the firm’s electronic order systems to process and route the orders to a market center,” FINRA said. “By omitting from its supervisory reviews the electronic order systems’ order handling time from order receipt to the route time to a market center, Merrill failed to reasonably supervise whether it made every effort to execute marketable customer orders that it received fully and promptly.”

Merrill also failed to “conduct supervisory reviews to ensure the accuracy of information recorded on the firm’s order memoranda for retail brokerage equity orders the firm received electronically.”