The U.S. Commodity Futures Trading Commission has issued a $300,000 fine against Merrill Lynch, a registered futures commission merchant, for failing to promptly produce records and ensure staff comply with regulations.
The trading authority argued that Merrill Lynch had for almost three years failed to produce reliable audit trail data requested by the CFTC’s division of enforcement. Because of this, a CFTC investigation was “substantially delayed”.
The CFTC also alleged that this was due to Merrill Lynch had failed to develop and diligently administer adequate procedures for responding to routine regulatory requests. As an example, the CFTC said Merrill Lynch did not have a process in place to locate account numbers or order entry operator identification numbers; instead, operations personnel simply worked from memory when searching for the data.
The CFTC noted that Merrill Lynch has already taken steps to revise its internal process for responding to regulatory data requests.
“As this case shows, the CFTC will hold registrants accountable for their regulatory obligations,” said James McDonald, director of the CFTC’s division of enforcement. “Recordkeeping requirements are important for regulatory and enforcement purposes, and the failure to produce reliable audit trail data here impeded a CFTC investigation.”
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