(Bloomberg) — Investment adviser units of Wells Fargo & Co. and Bank of America Corp.’s Merrill shortchanged customers by funneling uninvested cash into sweep accounts that benefited the banks but not their clients, the US Securities and Exchange Commission alleged Friday.
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The firms paid $60 million to settle the claims without admitting to or denying the regulator’s allegations.
Wells Fargo Clearing Services agreed to pay a civil penalty of $28 million; Wells Fargo Advisors Financial Network, $7 million; and Merrill, $25 million, according to the SEC’s cease-and-desist orders.
“Merrill took several significant steps before becoming aware of the commission’s investigation, including increasing the rates paid to advisory clients in Merrill’s Bank Deposit Program, lowering the minimum thresholds for investing cash in certain money market funds, and adopting and implementing enhanced supervisory procedures,” a representative for Merrill said in an emailed statement.
A Wells Fargo spokesperson said the agreement with the SEC “puts this broader industry matter behind us, and as the settlement states, we have already successfully addressed the issues covered by the resolution.”
–With assistance from Yizhu Wang.
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