The company logo of the Bank of America and Merrill Lynch is displayed at its office in Hong Kong March 8, 2013. REUTERS/Bobby Yip

NEW YORK (Reuters) - The Financial Industry Regulatory Authority said on Wednesday it fined Bank of America (BAC.N) Merrill Lynch $7 million for inadequate supervision of client brokerage accounts that used leverage to buy Puerto Rican municipal bonds and other securities.

FINRA found that between 2010 and mid-2013, Merrill Lynch’s systems did not adequately enforce policies that govern how clients can use securities-backed loans. Lines of credit, called loan management accounts at Merrill Lynch, allow clients to borrow money using the securities in their portfolios as collateral.

FINRA found Merrill Lynch’s systems failed to ensure the suitability of Puerto Rican municipal bonds and closed-end funds for customers who were highly leveraged through these loans or whose investments were mostly concentrated in Puerto Rican securities.

FINRA said that 25 customers with modest net worth had three-quarters of their portfolios invested in Puerto Rican securities and lost a total of $1.2 million.

The fine includes $780,000 in restitution for those clients.

“Following a comprehensive internal review of our loan management accounts, we reported issues to FINRA, cooperated fully with their inquiry and have strengthened our controls and procedures,” Bank of America spokesman Bill Halldin wrote in an email.

Merrill Lynch neither admitted nor denied the charges. </s> FINRA found that between 2010 and mid-2013, Merrill Lynch's systems did not adequately enforce policies that govern how clients can use securities-backed loans. Lines of credit, called loan management accounts at Merrill Lynch, allow clients to borrow money using the securities in their portfolios as collateral.

FINRA found Merrill Lynch's systems failed to ensure the suitability of Puerto Rican municipal bonds and closed-end funds for customers who were highly leveraged through these loans or whose investments were mostly concentrated in Puerto Rican securities.

FINRA said that 25 customers with modest net worth had three-quarters of their portfolios invested in Puerto Rican securities and lost a total of $1.2 million.

The fine includes $780,000 in restitution for those clients.

"Following a comprehensive internal review of our loan management accounts, we reported issues to FINRA, cooperated fully with their inquiry and have strengthened our controls and procedures," Bank of America spokesman Bill Halldin wrote in an email.

Merrill Lynch neither admitted nor denied the charges. </s> NEW YORK (Reuters) - The Financial Industry Regulatory Authority said it fined several Wells Fargo & Co businesses, RBC Capital Markets, LPL Financial and others a combined $14.4 million on Wednesday for record-keeping problems that may have allowed company and customer documents to be altered.

The securities industry's self-regulator found that the firms failed to keep hundreds of millions of electronic documents in a "write once, read many" format, which would have made it impossible to alter or destroy records after they were written.

The firms agreed to the fines but neither admitted nor denied the charges.

FINRA did not say documents had been changed but said the records were "pivotal to the firms' brokerage businesses."

The regulator fined Wells Fargo's securities, prime brokerage, brokerage and independent wealth management businesses. It also named RBS Securities, SunTrust Robinson Humphrey, Georgeson Securities Corp and PNC Capital Markets.

Wells Fargo spokeswoman Elsie Wilkinson said the firm took record-keeping compliance seriously.

"We self-reported these issues to FINRA and continue to remediate as agreed," Wilkinson said in an emailed statement.

RBC, LPL and the other companies named did not immediately respond to requests for comment.

Read the original article on Reuters. Copyright 2016. Follow Reuters on Twitter. </s> Deutsche Bank has reached a final settlement with the US Department of Justice (DOJ) to resolve litigation related to its sales of mortgage-backed securities before the 2008 financial crisis.

The bank has agreed to pay a total of US$7.2bn and admitted to misleading investors the DOJ announced, comprising a US$3.1bn civil penalty plus US$4.1bn in relief to homeowners. Deutsche Bank had indicated last month that it had reached an agreement in principle, relieving investors who sold the bank’s shares last September when a penalty as high as US$14bn had been suggested.

“This resolution holds Deutsche Bank accountable for its illegal conduct and irresponsible lending practices, which caused serious and lasting damage to investors and the American public,” Attorney General Loretta Lynch said in a written statement.

“Deutsche Bank did not merely mislead investors: It contributed directly to an international financial crisis.”

Deutsche Bank admitted to making false representations and omitting material information from disclosures to investors about the loans included in residential mortgage-backed securities that it sold. “Our conduct in this matter, which occurred from 2005 to 2007, falls short of our standards and is unacceptable,” said its chief executive officer (CEO) John Cryan.

“We apologise unreservedly for it. We have subsequently exited many of the underlying activities and comprehensively improved our standards. As we enter 2017, we are pleased to have resolved this matter.”

Deutsche Bank still faces separate investigations into whether it manipulated foreign currency rates and precious metals prices and whether it facilitated transactions that helped investors illegally transfer dollars out of Russia.

The DOJ imposed fines totalling US$46bn on US banks for their role in misleading investors when selling mortgage-backed securities, including US$16.7bn on Bank of America, which also covered Merrill Lynch and Countrywide Financial. And US$13bn on JPMorgan Chase, including misconduct by Washington Mutual and Bear Stearns. Other penalties included Citigroup (US$7bn) Goldman Sachs (US$5.1bn) and Morgan Stanley (US$3.2bn).

It then turned its attention to Deutsche and other European banks. Credit Suisse announced that it had agreed in principle to a US$5.3bn settlement. Last month the DOJ sued Barclays and two former executives on civil charges of fraud in the sale of mortgage-backed securities before 2008. </s> A Wells Fargo Bank is shown in Charlotte, North Carolina, U.S., September 26, 2016. REUTERS/Mike Blake

NEW YORK (Reuters) - The Financial Industry Regulatory Authority said it fined several Wells Fargo & Co businesses, RBC Capital Markets, LPL Financial and others a combined $14.4 million on Wednesday for record-keeping problems that may have allowed company and customer documents to be altered.

The securities industry’s self-regulator found that the firms failed to keep hundreds of millions of electronic documents in a “write once, read many” format, which would have made it impossible to alter or destroy records after they were written.

The firms agreed to the fines but neither admitted nor denied the charges.

FINRA did not say documents had been changed but said the records were “pivotal to the firms’ brokerage businesses,” and that it relies on these files to ensure firms are following securities laws.

The regulator said it also is concerned about the security of the records because hackers in recent years have aggressively targeted banks’ electronic storage databases.

The regulator fined Wells Fargo’s securities and prime brokerage businesses $4 million, and the bank’s brokerage and independent wealth management businesses $1.5 million. FINRA also fined RBS Securities, SunTrust Robinson Humphrey, Georgeson Securities Corp and PNC Capital Markets amounts ranging from $2 million to $500,000.

Wells Fargo spokeswoman Elise Wilkinson said the firm took record-keeping compliance seriously.

“We self-reported these issues to FINRA and continue to remediate as agreed,” she said in an emailed statement.

RBC declined to comment. LPL and the other companies named did not immediately respond to requests for comment. </s> Remember when the Consumer Financial Protection Bureau (CFPB) fined Wells Fargo $185 million for creating unapproved customer accounts to meet sales quotas last September? Under new legislation passed by the United States House of Representatives yesterday -- the Financial CHOICE (Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs) Act -- the CFPB's power to regulate and fine the financial industry would be curtailed significantly. This could have an impact on real estate agents and brokers as the CFPB is tasked with not only enforcing new mortgage regulations under Dodd-Frank, but also regulations like RESPA, the Real Estate Settlement Procedures Act, which dictates how agents and brokers may interact financially with title and mortgage partners. The nearly-600-page bill with a 148-page comprehensive summary and a four-page executive summary is dense, to say the least, but can shed light on what the problems with the CFPB's regulatory powers currently... </s> Wells Fargo will pay $1 billion to federal regulators to settle charges tied to its mortgage and auto lending business, the latest chapter in years-long, wide-ranging scandal at the banking giant. However, it appears that none of the $1 billion will go directly to the victims of Wells Fargo’s abuses.

In a settlement announced Friday, Wells will pay $500 million to the Office of the Comptroller of the Currency, its main national bank regulator, as well as a net $500 million to the Consumer Financial Protection Bureau.

The action by the CFPB is notable because it is the first penalty imposed by the bureau under Mick Mulvaney, who President Trump appointed to take over the consumer watchdog agency in late November. The $500 million is also the largest penalty imposed by the CFPB in its history, the previous being a $100 million penalty also against Wells Fargo, and matches the largest fine ever handed out by the Comptroller of the Currency, which fined HSBC $500 million in 2012.

In a statement, the OCC said it imposed such a large fine against Wells “given the severity of the deficiencies and violations of law, the financial harm to consumers, and the bank’s failure to correct the deficiencies and violations in a timely manner.”

The fine against San Francisco-based Wells Fargo had been expected. The company disclosed last week that it was in discussions with federal authorities over a possible settlement related to its mortgage and auto lending businesses, and that the fine could be as much as $1 billion.

The settlement also contains other requirements that would restrict Wells Fargo’s business. The bank will need to come with a risk management plan to be approved by bank regulators, and get approval from bank regulators before hiring senior employees.

“While we have more work to do, these orders affirm that we share the same priorities with our regulators and that we are committed to working with them as we deliver our commitments with focus, accountability, and transparency,” said Wells Fargo Chief Executive Tim Sloan in a statement.

The $500 million paid to the Comptroller of the Currency will be paid directly to the U.S. Treasury, according to the order. The $500 million paid to the CFPB will go into the CFPB’s civil penalties fund, which is used to help consumers who might have been impacted in other cases. But zero dollars of either penalty is going directly to Wells Fargo’s victims.

The bank has already been reimbursing customers in its auto and mortgage businesses for these abuses. Wells Fargo has been refunding auto loan customers since July and been mailing refund checks to impacted mortgage customers since December.

On Friday, Wells Fargo adjusted its previously reported first-quarter earnings to reflect the penalty. The nation’s third-largest bank now says it made $4.7 billion in the first 90 days of the year, down from $5.46 billion in the same period a year earlier.

While banks have benefited from looser regulations and lower taxes under President Trump, Wells Fargo has been called out specifically by Trump as a bank that needed to be punished for its bad behavior.

“Fines and penalties against Wells Fargo Bank for their bad acts against their customers and others will not be dropped, as has incorrectly been reported, but will be pursued and, if anything, substantially increased. I will cut Regs but make penalties severe when caught cheating!,” Trump wrote on Twitter back in December.

The abuses being addressed Friday are not tied directly to Wells Fargo’s well-known sales practices scandal, where the bank admitted its employees opened as much as 3.5 million bank and credit card accounts without getting customers’ authorization. But they do involve significant parts of the bank’s businesses: auto lending and mortgages.

Last summer Wells Fargo admitted that hundreds of thousands of its auto loan customers had been sold auto insurance that they did not want or need. In thousands of cases, customers who could not afford the combined auto loan and extra insurance payment fell behind on their payments and had their cars repossessed.

In a separate case, Wells Fargo also admitted that thousands of customers had to pay unnecessary fees in order to lock in their interest rates on their home mortgages. Wells Fargo is the nation’s largest mortgage lender.

Wells Fargo has been under intense scrutiny by federal regulators for several months. The Federal Reserve took a historic action earlier this year by mandating that Wells Fargo could not grow larger than the $1.95 trillion in assets that it currency held and required the bank to replace several directors on its board. The Federal Reserve cited “widespread abuses” as its reason for taking such an action.

This settlement does not involve Wells Fargo’s wealth management business, which is reportedly under investigation for improprieties similar to those that impacted its consumer bank. Nor does this involve an investigation into the bank’s currency trading business.

Consumer advocates have been critical of the Trump administration’s record since it took over the CFPB late last year. However, advocates were pleased to see Wells Fargo held to account.

“Today’s billion dollar fine is an important development and a fitting penalty given the severity of Wells Fargo’s fraudulent and abusive practices,” said Pamela Banks, senior policy counsel for Consumers Union. </s> The U.S. Financial Industry Regulatory Authority (FINRA) announced on Wednesday it has fined 12 firms a total of US$14.4 million for record keeping deficiencies that violated federal securities laws and regulatory rules.

FINRA found deficiencies in the preservation of records in a format that prevents those records from being altered. The firms failed to maintain certain electronic records in "write once, read many" (WORM) format, which prevents the alteration or destruction of records stored electronically, FINRA says in a statement. The WORM deficiencies affected millions, and in some cases, hundreds of millions, of records, FINRA adds.

The sanctioned firms include: RBC Capital Markets LLC and RBC Capital Markets Arbitrage S.A., which were jointly fined US$3.5 million; Wells Fargo Securities, LLC and Wells Fargo Prime Services, LLC, which were jointly fined US$4 million; and, RBS Securities, Inc., which was fined US$2 million.

The firms settled the cases without admitting or denying the charges, but consented to the entry of FINRA's findings.

"These disciplinary actions are a result of FINRA's focus on ensuring that firms maintain accurate, complete and adequately protected electronic records. Ensuring the integrity of these records is critical to the investor protection function because they are a primary means by which regulators examine for misconduct in the securities industry," says Brad Bennett, executive vice president and chief of enforcement at FINRA, in a statement. </s> Deutsche Bank has cemented a $7.2 billion settlement with the Department of Justice for selling toxic mortgage-backed securities in the years before the market meltdown of 2008.

The DOJ said Tuesday that the settlement -- which includes a $3.1 billion civil penalty -- is the largest of its kind levied by the department.

The other $4.1 billion included in the settlement is earmarked for "relief to underwater homeowners, distressed borrowers and affected communities," DOJ said in a statement. That includes issuing loan forgiveness and forbearance and providing funding for affordable housing across the U.S., to be overseen by an independent monitor.

"Deutsche Bank did not merely mislead investors: It contributed directly to an international financial crisis," Attorney General Loretta Lynch said.

"Our conduct in this matter falls short of our standards and is unacceptable," said Deutsche Bank (DB) CEO John Cryan. "We apologize unreservedly for it. We have subsequently exited many of the underlying activities and comprehensively improved our standards."

The deal was first announced in December, but Tuesday marked the formal closure of the settlement.

The DOJ has spent the years since the 2008 financial crisis going after banks that were involved in dicey trading practices. Deutsche Bank (DB), like many of its competitors, was found to have packaged up poor-quality mortgage bonds into securities that looked like trustworthy investments.

The DOJ has levied more than $60 billion in fines over the toxic mortgages that plunged the world into a recession back in 2008. Among the other banks fined include JP Morgan (JPM), $13 billion; Bank of America (BAC), $16.7 billion; Goldman Sachs (GS), $5.1 billion; and Citigroup (C), $7 billion.
The Financial Industry Regulatory Authority announces it has fined Bank of America Merrill Lynch $7 million for failure to supervise the use of leverage in its brokerage accounts, especially in connection with Puerto Rico municipal bonds.