For clients burned by Merrill Lynch, the FINRA arbitration system can be used to recover those losses. The Securities and Exchange Commission (SEC) forced two Bank of America Merrill Lynch entities to pay $11 million for using inaccurate and old data when executing short-sale orders for customers. The SEC found that Merrill Lynch’s execution platforms had flaws concerning its “easy to borrow” (ETB) lists. An SEC order stated: “Merrill Lynch and other broker-dealers are routinely asked by customers to ‘locate’ stock for short selling, and firms prepare ETB lists comprised of stocks they have deemed readily accessible for the purpose of granting locates. At times during the course of the trading day, some securities that Merrill Lynch placed on its ETB list that morning became no longer easily available to borrow as determined by lending desk professionals tracking market events and other daily developments.”
The SEC found that Merrill stopped using the ETB list to source locates, but their execution platforms were programmed to continue processing short-sale order based on the ETB list. To this the SEC stated: “For a period until 2012, a flaw in Merrill Lynch’s systems occasionally triggered the inadvertent use of day-old data when constructing ETB lists. The sale data caused some securities to be included on an ETB list when they should not have been.
Stoltmann Law Offices sues firms such as Bank of America Merrill Lynch in the Financial Industry Regulatory Authority (FINRA) arbitration process to recover investment losses for retail investors. If you would like to sue Merrill Lynch in the FINRA arbitration forum, please call us at 312-332-4200 to speak to an attorney. The call is free with no obligation. We are based in Chicago, Illinois.