Irish unit of Merrill Lynch fined €2.75m by regulator
Merrill Lynch's Irish unit was fined €2.75m by the financial regulator after it found that traders failed to appropriately value their positions on transactions that lost the company $461m (€307m).
"The first incident occurred between December 2008 and February 2009, resulting in losses to Merrill Lynch International Bank of $456m," the Irish Financial Services Regulatory Authority said yesterday.
The second occurred between May and August 2009, resulting in losses of $5.3m. This second incident was reported to the regulator during the investigation into the first incident and so the two breaches were dealt with in the one penalty, the regulator said.
The regulator said the breaches happened because Merrill Lynch failed to have in place "a well-defined and transparent line of supervisory responsibility".
It also said there was "a failure to supervise the trader's activity and an inadequate month-end independent price verification process".
"Additionally, in the first incident, it was also found that there was a failure to manage effectively market risk limits in respect of the trader's activities," the regulator said.
The trader worked for the London branch of Merrill Lynch International Bank Ltd, a Dublin-registered company with an address at Treasury Buildings, Lower Canal Street.
Merrill Lynch confirmed that it has taken "complete remedial action to rectify fully the breaches".