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Merrill Lynch and manager of options strategy hit with $9.3m in penalties

By

Kenneth Corbin

Merrill Lynch and Harvest Volatility Management have agreed to pay more than $9m to settle allegations that they pushed clients’ investments in an options strategy past their stated limits, saddling them with hefty fees and substantial trading losses in the process.

The SEC alleges that Merrill was aware of its clients’ elevated exposure to the CYES strategy, but that it and Harvest didn’t maintain adequate disclosure policies to alert clients about their expanded positions and the associated risks.
The SEC alleges that Merrill was aware of its clients’ elevated exposure to the CYES strategy, but that it and Harvest didn’t maintain adequate disclosure policies to alert clients about their expanded positions and the associated risks. Photo: Dreamstime.com

The Securities and Exchange Commission alleges that around summer 2011, Merrill (a unit of Bank of America) approved Harvest’s options trading strategy for certain ultra-high-net-worth clients.

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