Merrill Lynch Agrees to Pay $9.5 Million to Settle Charges of Charging Undisclosed Fees for Foreign Currency Exchanges

The SEC today charged Merrill Lynch, Pierce, Fenner & Smith Incorporated with charging advisory clients more than $4 million in undisclosed foreign exchange fees for transfers to or from their accounts. To settle the case, Merrill Lynch has agreed to pay disgorgement of approximately $4.1 million; prejudgment interest of $760,000; and a civil penalty of $4.8 million, as well as to distribute funds to harmed clients. The SEC’s investigation found that, between May 2016 and July 2020, Merrill Lynch did not disclose an additional fee, referred to as a production credit, which was often greater than the disclosed markup or markdown on the foreign currency exchanges. In addition, the SEC found that Merrill Lynch failed to adopt policies and procedures to prevent its disclosures from being misleading about the fees it charged for the foreign currency exchanges.