Merrill Lynch Will Pay $11 Million to Fix Error

WASHINGTON (CN) - Merrill Lynch will pay $11 million to settle an SEC complaint accusing it of using inaccurate data to execute short sale orders.

The errors seem to have stemmed from computer programming problems, according to a statement the SEC issued Monday explaining its cease and desist order.

Customers routinely ask broker-dealers to locate stock for short sales, so firms prepare easy-to-borrow lists of stock for this. The SEC said that Merrill Lynch employees properly stopped using ETB stocks when they no longer became easy to borrow, but its "execution platforms" used the inaccurate ETB lists until the day after stocks were removed from it.

The SEC fixed the problem, the SEC said. It agreed to pay a $9 million penalty, $1,566,246 in disgorgement and $334,565 in interest, and to admit wrongdoing.

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