Merrill Lynch will pay a fine of nearly $11 million after the Wall Street firm used inaccurate data to execute some short sale orders, the SEC announced.
The fine involves so-called ETB (easy-to-borrow) lists. Instead of using real-time ETB lists and the associated data, Merrill Lynch's personnel -- and associated computing systems -- used day-old data, the SEC said. "The stale data caused some securitues to be included on an ETB list when they should not have been."
Instead of fighting the allegations, Merrill Lynch admitted to violating a data quality rule within the Securities Exchange Act of 1934, the SEC said.
Merrill Lynch agreed to pay a $9 million penalty, more than $1.5 million in disgorgement and over $330,000 in prejudgment interest. Merrill Lynch also agreed to hire a compliance consultant that will "conduct a comprehensive review of the firm’s policies, procedures, and practices for accepting short sale orders for execution, effecting short sales in reliance on the ETB list, and monitoring compliance."
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