Merrill Lynch Unit Fined for NYSE Violation

A unit of Merrill Lynch & Co. agreed to pay the New York Stock Exchange $250,000 for failing to meet capital requirements and breaking other rules, the NYSE said. Capital at Merrill Lynch, Pierce, Fenner & Smith Inc., the firm’s main unit, fell $1 billion to $3 billion short of required levels in October 1998, the NYSE said. Weakness in the Asian economy in the fall of 1998 led Merrill to start increasing its cash balances, according to the NYSE report. As part of that program, the firm began shifting funds from its brokerage subsidiary. The firm added to the shortage by using funds from the subsidiary to pay off a $500-million loan. In requesting permission for that payment, the Merrill unit sent false signals about its finances, according to the NYSE. Merrill said the transfers were caused by a computational error.