Bank of America Merrill Lynch is set to pay $2.5 million in restitution and fines after failing to provide discounts to customers on a certain type of redeemable security, the brokerage industry's primary regulator said on Wednesday.
FINRA imposed a $500,000 fine on the brokerage firm plus an additional $2 million in restitution to be paid to customers who did not receive the anticipated "sales charge discounts" on unit investment trusts.
According to FINRA, Merrill Lynch allegedly failed to track whether a customer was receiving the appropriate amount of UIT discounts.
In a UIT, redeemable units of a fixed portfolio of securities are issued. The units terminate on a specific date. The firms that sponsor UITs frequently offer sales charge discounts to investors, commonly referred to as "breakpoint discounts," and "rollover and exchange discounts."