Merrill Repaid $7M to Fund Investors for Overcharges

She added that Merrill had reimbursed the affected clients and cooperated with FINRA's investigation, including engaging an outside consulting firm to identify potentially wronged customers and calculate their total remediation.

Mutual fund issuers usually offer clients a right of reinstatement, which allows investors to purchase shares of a fund after previously selling shares of that fund or another fund in the same fund family, without incurring a front-end sales charge, or to recoup all or part of a contingent deferred sales charge.

Due to insufficiently designed supervisory systems and procedures and a reliance on registered representatives to manually identify and apply appropriate waivers and rebates, Merrill failed to identify which customers were due the sales charge waivers or fee rebates and or calculate the correct amounts for reimbursement, according to FINRA.

Merrill also failed to reasonably monitor missed reinstatements because its firm alerts were  captured only recently executed mutual fund transactions while fee waivers were available for  some fund purchases up to a year after the initial sales.

In settling this matter, Merrill Lynch neither admitted nor denied the charges, but consented to the entry of FINRA's findings.

— Check out 13 Best & Worst Broker-Dealers: Q1 Earnings, 2020 on ThinkAdvisor.