NEW YORK (Legal Newsline) — New York Attorney General Eric T. Schneiderman announced March 23 that Bank of America Merrill Lynch (BofAML) will pay $42 million after allegations of fraudulent electronic trading services.
“Bank of America Merrill Lynch went to astonishing lengths to defraud its own institutional clients about who was seeing and filling their orders, who was trading in its dark pool, and the capabilities of its electronic trading services,” Schneiderman said in a statement. “As Wall Street firms offer increasingly complex electronic trading services, they cannot use new technology to exploit their clients in service of their business relationships with large industry players, like Bank of America Merrill Lynch did here.”
BofAML allegedly violated the Martin Act, New York’s securities law, and New York Executive Law § 63(12). The $42 million penalty is the largest New York has ever secured in recovery after an electronic trading case.
“I urge all members of the financial community to evaluate and if necessary reform your practices around electronic trading services, to ensure that you treat each and every client, big and small, ethically and loyally. For those financial institutions that refuse to do so, we will hold you accountable,” Schneiderman said in a statement.
Handling the case for the state were assistant attorney general John Castiglione, volunteer attorney Rita Burghardt McDonough, investor protection enforcement section chief Cynthia Hanawalt, and investor protection bureau chief Katherine C. Milgram.