The regulator said the decision follows its investigation in which SFC raised concerns that Merrill Lynch had failed to properly assess the financial situation and investment objectives of more than 40 of the 72 customers who invested in the index-linked notes during 2007.
SFC said that the key product information was only provided to clients after they had agreed to invest in the index-linked notes and that Merrill Lynch kept inadequate documentation to explain the rationale behind the advice they had given to their customers.
The watch dog added that Merrill Lynch will implement Enhanced Complaint-Handling Procedures (ECHP) to review client complaints regarding its distribution, sale, and provision of investment advice in relation to unlisted structured products other than the two index-linked notes.
According to the SFC, the Merrill Lynch has agreed to repurchase from customers holding the outstanding index-linked notes. The value of the repurchase offers is expected to be approximately $3.67m.
In addition, Merrill Lynch has agreed to offer top up payments to customers who bought the index-linked notes through Merrill Lynch and redeemed them for less than their principal invested, the regulator added.
