Bank of America in $42 million settlement over ‘masking’ electronic trading activities

Bank of America’s Merrill Lynch often misleads customers and tells them that billions of stock transactions were actually transferred to outside companies when they were internally managed. This is the five-year plan of the New York Attorney General’s statement that the bank’s trading services have emerged. Some are more complicated than they are.

Last Friday, the Attorney General announced a settlement of US$ 42 million with Bank of America on its so-called “masking” strategy, which applies to 16 million customer trading orders between 2008 and 2013, representing more than 4 billion trading shares. .

Eric Schneiderman of New York stated that Bank of America has admitted that it has dealt with these deals with electronic trading companies Citadel Securities, Knight Capital, D. E. Shaw, Two Sigma Securities, and Madoff Securities.

“The Bank of America Merrill Lynch spent an astonishing amount of time defrauding its institutional clients to see who was looking at and filling orders, who were trading in the dark, and the capabilities of electronic trading services,” the Attorney General said in a statement.

Misleading activities started in 2008. Bank of America hides secret trading activities by reorganizing the system to change the confirmation information sent to customers about their transaction processing. Schneiderman said that Bank of America employees called this activity “masking.”

New York Attorney General Eric Schneiderman in New

New York Attorney General Eric Schneiderman was held in New York in February 2016. (Source: Eduardo Munoz Alvarez, Getty Images)

In a statement sent to CNBC by e-mail, Bank of America stated: “The reconciliation is mainly related to the acts that occurred 10 years ago. At any time, we have fulfilled our obligation to deliver the best price to our customers. About five years ago, Customers communicate transaction execution issues. ”

Bank of America is also accused of providing investors with inaccurate statements about its trading services. It tells them that up to 30% of transactions in internally managed electronic trading pools come from retail investors, for example, when it is really more like 5%.

Two years ago, Schneiderman reached a settlement with the Credit Suisse Bank, Barclays Bank and Deutsche Bank on transaction abuse. Credit Suisse and Barclays Bank paid US$30 million and US$35 million, respectively, to address allegations that they distorted transactions with customers in the so-called dark pools, which are private electronic trading sites where buyers and sellers should be subject to Protection, high-speed trading behavior. Deutsche Bank paid $18.5 million to settle allegations of fraud in its trade order routing practice.

The three banks also conducted parallel investigations with the U.S. Securities and Exchange Commission

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