[ by Howard Haykin ] Banc of America Investment Services, Inc., based in Boston, MA, agreed to settle FINRA charges that it took inappropriate action with regard to customers participating in one of two firm investment advisory mutual fund asset allocation programs - i.e., in the “fund strategies advised” program. During the Relevant Period of this disciplinary action - from May 2003 to June 2006 - BAIS was the investment adviser and sponsor of the Fund Strategies program, an investment advisory mutual fund asset allocation program with two versions: (i) Fund Strategies-Advised was nondiscretionary; (ii) Fund Strategies-Managed was discretionary. Background Info on the Respondent. BAIS became a FINRA member in December 1985 and was a registered broker-dealer until 1/4/10, when the Firm terminated its registration with FINRA after the merger with Merrill Lynch, Pierce, Fenner & Smith Incorporated.  BAIS offered investment products, accounts, and services for investors.  At the time of the merger with Merrill Lynch, BAIS had about 2,000 registered reps and about $125 billion in customer assets. FINRA Findings and Allegations. During the relevant period, BAIS failed to send contemporaneous trade confirmations to customers enrolled in one of its investment programs.  Specifically, the Firm made the decision not to send contemporary trade confirmations to those customers who opted to receive quarterly, rather than monthly, account statements. According to FINRA, this action violated SEC and FINRA rules and affected trade confirmations for about 2,702 customer accounts in the Advised or non-discretionary version, affecting over 23,000 transactions with a total value of $323 million. Exchange Act Rule 10b-10(a) provides in pertinent part ... any broker or dealer who effects a transaction in the account of a customer in any security must provide written notification of the date and time of the transaction and identify the price, and the number of shares of the security.  The preliminary note to the rule indicates that this information must be provided to customers "at or before the completion of such transaction." Based on these rules, it was improper for BAIS to allow its Fund Strategies-Advised customers to forgo the receipt of immediate trade confirmations and instead, receive trade confirmations on a quarterly basis.  For those accounts where the customers opted on the account application to receive periodic account statement delivery, the Firm sent the customers individual trade confirmations on a quarterly basis, instead of sending immediate trade confirmations pursuant to Rule 10b-10(a).

[C-I Note: According to FINRA's wording, it appears that customers were opting to receive quarterly account statements in lieu of monthly statements.  There is no mention of trade confirmations.  Nor is there any mention that the phrase "periodic account statement" includes both confirmations and account statements.  It's possible other types of account documentation may also be included, if the definition is viewed in broad terms.]

In addition to allegedly violating Exchange Act Rule 10b-10(a), BAIS also appeared to violate NASD Rules 2230 and 2110 by its failure to deliver immediate trade confirmations to certain customers. Repeat Violation. On 1/3/05, BAIS was sanctioned with a $5K fine for violating Exchange Act Rule 10b-10 by, among other things, failing to provide written notification on 30 trade confirmations that it was a market maker in a particular security. FINRA Sanctions. For its allegedly violations, Banc of America Investment Services agreed to pay a $50K fine. For further details, go to:   [FINRA Disciplinary Actions for August 2013] and   [FINRA AWC # 2008014187702].