Merrill Lynch Pierce Fenner & Smith Inc. agreed to repay more than $10.5 million to its customers to settle SEC charges that it misled clients into overpaying for residential mortgage-backed securities.
In addition, Merrill Lynch will pay penalties of about $5.2 million. Merrill Lynch traders and salespeople convinced customers to overpay for RMBS by misstating the price Merrill Lynch paid to buy the securities, according to a press release issued by the SEC.
The SEC order also found that Merrill Lynch's RMBS traders and salespeople illegally profited from excessive and undisclosed commissions called mark-ups. The profits, in some cases, were more than twice the amount the customers should have paid.
