Merrill agrees to pay $400K to setttle fund-churning case
Finra claims brokerage failed to properly supervise ex-rep
Merrill Lynch has agreed to pay a $400,000 fine in a fund-churning case brought by the Financial Industry Regulatory Authority Inc.
The brokerage will also pay $139,718 in restitution to customers.
Finra enforcers signed off on the case this week.
The regulator claimed that Merrill failed to supervise former broker David Bredenburg, who worked in the firm’s Towson, Md. office. Finra alleged that Mr. Bredenburg engaged in at least 37 unsuitable short-term trades in unit trusts and closed-end funds from Oct. 2006 through February 2009, and used excessive margin in doing so.
Finra said Merrill did not take action to stop the alleged unsuitable trades until customers began to complain in April 2008.
Merrill fired Mr. Bredenburg in February 2009 for unauthorized trading, according to regulatory records filed by the company.
Mr. Bredenburg was barred from the industry by Maryland regulators in March 2009, and by Finra in July 2010, according to regulatory filings.
Merrill Lynch spokesman Bill Halldin declined comment. InvestmentNews was not able to reach Mr. Bredenburg.
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