Hong Kong fines Merrill for trading errors

The Securities and Futures Commission imposes a penalty of HK$3.5 million for mis-marking.

Hong Kong's Securities and Futures Commission SFC has fined Merrill Lynch Asia Pacific Limited and Merrill Lynch Futures Hong Kong Limited HK$3.5 million $450,000 for systems and controls failings associated with mis-marking activities in a trading book.

A spokesman at Bank of America Merrill Lynch declined to comment.

The problems occurred from December 2007 to October 2008, shortly before Merrill was acquired in a shotgun wedding by Bank of America. An unidentified managing director at Merrill had mis-marked a trading book in exotic options by manipulating the volatility marks in the valuation model, and accessed the computer system without authority to alter pricing parameters on various occasions.

The mis-marking activities, which...

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