[ by Howard Haykin ] FINRA announced Thursday that Merrill Lynch, Pierce, Fenner & Smith, Inc. had agreed to settle FINRA charges that failures to supervise led to its customers being overcharged for certain unwarranted fees.  The firm also failed to provide certain required trade notices. FINRA Findings and Allegations. For nearly 9 years, from April 2003 to December 2011, Merrill Lynch's supervisory system allegedly was deficient and incapable of ensuring that customers in certain investment advisory programs were billed in accordance with contract and disclosure documents.  All told, nearly 95,000 customer accounts were overcharged fees in excess of $32 million.  Merrill Lynch has since returned the unwarranted fees, with interest, to the affected customers. Further, Merrill Lynch allegedly failed to provide timely trade confirmations to customers in certain advisory programs due to computer programming errors - under several scenarios:

• For more than 5 years - from July 2006 to November 2010 - Merrill Lynch failed to send customers trade confirmations for nearly 11 million trades in more than 230,000 customer accounts.

• Merrill failed to provide complete and accurate information millions of trade confirmations and account statements:
  • Firm failed to disclose its capacity on at least 7.5 million mutual fund purchases - i.e., as agent or principal - on trade confirmations and account statements.
  • At various times, firm also failed to deliver certain proxy and voting materials, margin risk disclosure statements and business continuity plans.

Sanctions and Restitutions. Merrill Lynch settled the FINRA charges by providing $32 million in remediation, plus interest to customers who had been overcharged, and by paying to FINRA a $2.8 million fine. FINRA Staff Credits. Investigation by Gerard Murphy and Tracey Seraydarian, supervised by Richard Best and Michael Choi. For further details, go to: [FINRA News Release , 6/21/12] and [FINRA AWC #2008-14187701].