FINRA fines Merrill Lynch $1m for failing to arbitrate disputes with employees
The Financial Industry Regulatory Authority (FINRA) has fined Merrill Lynch, Pierce, Fenner & Smith $1m for failing to arbitrate disputes with employees relating to retention bonuses.
The regulator found that Merrill Lynch, after merging with Bank of America in January 2009, implemented a bonus program to retain certain high-producing registered representatives and purposely structured it to circumvent the arbitration rule.
According to FINRA, Merrill Lynch paid $2.8bn in retention bonuses structured as loans to more than 5,000 employees.
FINRA executive vice president and chief of enforcement Brad Bennett said that Merrill Lynch specifically designed this bonus program to bypass FINRA's rule requiring firms to arbitrate disputes with employees, and purposefully filed expedited collection actions in New York State courts and denied those registered representatives a forum to assert counterclaims.
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