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BofA Securities Fined $90K for FINRA Violations Related to Market Manipulation

The Financial Industry Regulatory Authority has fined and censured BofA Securities – a full-service broker-dealer owned by Bank of America and formerly known as Bank of America Merrill Lynch – for violating rules designed to prevent market manipulation.

According to FINRA, the violations occurred over a three-year period, from August 2019 to August 2022, and involved 195 instances of untimely or inaccurate filings related to 112 securities distributions. FINRA also said that, from August 2019 until March 2024, BofA Securities failed to establish and maintain adequate supervisory systems to ensure compliance with FINRA rules.

The primary rule in question, FINRA Rule 5190, is part of Regulation M, a set of anti-manipulation provisions established under the Securities Exchange Act of 1934. Regulation M is the U.S. Securities and Exchange Commission’s principal anti-manipulation provision and aims to prevent those involved in a securities distribution from artificially influencing the price of those securities.

FINRA Rule 5190 “sets forth notice requirements applicable to all members participating in distributions of securities as a manager for purposes of monitoring compliance with the provisions of Regulation M.” By violating Rule 5190, the firm also violated FINRA Rule 2010, which states that “[a] member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade.”

FINRA stated that BofA Securities repeatedly failed to submit timely and accurate notifications regarding restricted trading periods and other details related to the distributions. These failures were due in part to problems with the firm’s third-party deal management system and a lack of adequate internal controls, resulting in a violation of Rule 3310 which requires the establishment and maintenance of a supervisory system.

Without admitting or denying the allegations, BofA Securities agreed to pay a fine of $90,080 and a censure.

BofA Securities is a full-service broker-dealer providing a range of financial services, including sales and trading, market making, investment banking, and underwriting. The firm is headquartered in New York City and has approximately 5,350 registered representatives, with approximately 140 branch offices. BofA Securities became a FINRA member in January 2018.

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