January 26, 2015 8:18 AM ET

Capital Markets

Company Overview of Merrill Lynch, Pierce, Fenner & Smith Incorporated

Company Overview

Merrill Lynch, Pierce, Fenner & Smith Incorporated offers security brokerage and dealership services. Additionally, it provides investment advisory services. BofA Merrill Lynch, Pierce, Fenner & Smith Incorporated was formerly known as Merrill Lynch Pierce Fenner & Smith, Inc. The firm is based in New York, New York. Merrill Lynch, Pierce, Fenner & Smith Incorporated operates as a subsidiary of NB Holdings Corporation.

One Bryant Park

New York, NY 10036

United States

Phone:

800-637-7455

Key Executives for Merrill Lynch, Pierce, Fenner & Smith Incorporated

Chief Operating Officer
Head of Asia-Pacific (APAC) region
Regional Managing Director of Private Banking And Investment Group's Pacific West Region
Global Head of Intermediary Business
Managing Director of Mid-America Market
Compensation as of Fiscal Year 2014.

Merrill Lynch, Pierce, Fenner & Smith Incorporated Key Developments

The Financial Industry Regulatory Authority Fines $1.9 Million to Merrill Lynch, Pierce, Fenner & Smith Incorporated

The Financial Industry Regulatory Authority (FINRA) announced that it has fined Merrill Lynch, Pierce, Fenner & Smith Incorporated $1.9 million for fair pricing and supervisory violations in connection with more than 700 retail customer transactions in distressed securities over a two-year time period. Merrill Lynch was also ordered to pay more than $540,000 in restitution, plus interest, to affected customers. FINRA found that Merrill Lynch's Global Banking & Markets Credit Trading Desk purchased Motors Liquidation Company Senior Notes (MLC Notes) from retail customers at prices 5.3% to 61.5% below the prevailing market price. The Credit Desk, after accumulating smaller lots of MLC Notes through retail customer transactions, sold the MLC Notes to other broker-dealers within the prevailing market price. Of the 716 retail customer transactions, 510 had markdowns in excess of 10%. As a result, in 716 instances, Merrill Lynch purchased MLC Notes at prices that were not fair to its retail customers. The notes were originally issued by General Motors Corporation prior to its bankruptcy. FINRA also found that Merrill Lynch did not have an adequate supervisory system in place to detect whether the firm's Credit Desk executed a retail customer transaction at a price consistent with the prevailing market price of that security. Specifically, the firm did not conduct post-trade best execution or fair pricing reviews of these transactions, or conduct fair pricing or best execution post-trade reviews of other retail customer trades executed on the Credit Desk. As part of the sanctions, Merrill Lynch is also ordered to provide three reports over the next 18 months regarding the effectiveness of the firm's supervisory system with respect to the pricing of retail customer transactions executed by the Credit Desk.

Virginia Files Lawsuit against Barclays Capital Inc., Citigroup Global Markets Inc., Countrywide Securities Corp., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman, Sachs & Co., RBS Securities, Inc., HSBC Securities (USA) Inc., Morgan Stanley & Co. LLC, UBS Securities LLC, WAMU Capital Corp., J.P. Morgan Securities LLC, and Merrill Lynch, Pierce, Fenner & Smith Inc

Virginia has filed a lawsuit seeking $1.15 billion in damages against 13 banks accused of misleading the Virginia Retirement System. The case stems from the sale of residential mortgage-backed securities to VRS from 2004 to 2010. The retirement system was forced to sell most of the securities, taking a loss of $383 million. The VRS was entitled to accurate information about the underlying mortgages when making decisions on how to invest taxpayer money and contributions by employees. Instead, these large banks purposefully included high-risk mortgages in securities and fraudulently misrepresented the quality of those loans to rating agencies and large investors like VRS. The case is the financial fraud action brought by the commonwealth and is the case ever brought under the Virginia Fraud Against Taxpayers Act. The banks named in the suit are: Barclays Capital Inc., Citigroup Global Markets Inc., Countrywide Securities Corp., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman, Sachs & Co., RBS Securities Inc., HSBC Securities (USA) Inc., Morgan Stanley & Co. LLC, UBS Securities LLC, WAMU Capital Corp., J.P. Morgan Securities LLC (and as current owner of Bear, Stearns & Co.), and Merrill Lynch, Pierce, Fenner & Smith Inc. (and as current owner of Banc of America Securities LLC). The attorney generals office says that the banks offered the securities to VRS as stable, solid investments, but an analysis showed that nearly 40% of the 785,000 mortgages backing 220 securities purchased by the retirement system had a significantly higher risk for default. The suit charges that these banks knew, or should have known, that claims they made about the quality of the mortgages were false. The attorney generals office said a whistleblower, Integra REC LLC, discovered the fraud using sophisticated methods to match the securities purchased by VRS with the mortgages and properties they contained. The case is being handled by the civil litigation division of the attorney generals office.

Federal Deposit Insurance Corporation Announces Settlement with Bank of America

The Federal Deposit Insurance Corporation (FDIC) as Receiver for 26 failed banks has announced a $1,031,000,000 settlement with Bank of America Corporation, Banc of America Funding Corporation, Banc of America Securities LLC, Banc of America Mortgage Securities, Inc., Bank of America, N.A., NB Holdings, Inc., Countrywide Financial Corporation, Countrywide Securities Corporation, Countrywide Home Loans, Inc., CWMBS, Inc., CWALT, Inc., CWABS, Inc., CWHEQ, Inc., Countrywide Capital Markets, LLC, Merrill Lynch Mortgage Capital Inc., Merrill Lynch Mortgage Investors Inc., and Merrill Lynch, Pierce, Fenner & Smith Inc. of certain of the receiverships' claims. The settlement funds will be distributed among the 26 receiverships.

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