NASD Fines Merrill Over Actions at Call Centers

Merrill Lynch & Co. was fined $5 million by the NASD, formerly the National Assn. of Securities Dealers, for holding improper sales contests at call centers and allowing brokers there to steer clients into unsuitable mutual funds.

From 2001 to 2004, the New York-based firm failed to staff the call centers with properly licensed and qualified supervisors, the NASD said Wednesday. Merrill rewarded investment advisors at the locations, in Hopewell, N.J., and Jacksonville, Fla., with dinners and tickets to rock concerts and sporting events in return for selling the firm’s own mutual funds.

The NASD barred Merrillfrom staging any sales contests at call centers and ordered the firm to hire a consultant to improve supervisory and compliance procedures. Until the corrective measures are made, Merrill must supervise call centers more closely and monitor conversations between brokers and customers, the NASD said.

“We have frankly acknowledged that we had growing pains in Merrill Lynch’s Financial Advisory Center four and five years ago when it rapidly expanded,” Merrill said. “We are confident we’ve worked them out.” Shares of Merrill fell 2 cents to $78.80.