Adding Merrill Lynch to Bulge Broker Equities Analysis

As we approach the completion of our initial bulge broker analysis in equities – leaving Citi, Barclays and BNP Paribas modeling among some of the remaining work to be done – today’s addition to the thread is none other than the masthead for what used to be known as the “Thundering Herd”: Merrill Lynch Pierce Fenner & Smith. Kudos to those of you who acknowledge the oft-forgotten role played by Messrs. Pierce, Fenner & Smith.

Anyway, we add this one to the rankings at an unusual time, given that – now over a decade since their shotgun wedding – Bank of America has spent some time and energy in 2019 rebranding all but a few of the Herd’s remaining jewels. One impact of this effort will now place BofA Securities, LLC as the group’s institutional broker-dealer arm. To wit, from the bank’s latest 13F report:

“Effective May 13, 2019, the U.S. brokerage operations of Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S), an indirect wholly-owned subsidiary of Bank of America Corporation (BAC), were reorganized into two separate legal entities (the Reorganization). In the Reorganization, BofA Securities, Inc., a Delaware corporation formed on September 1, 2015 (BofA Securities), is the new legal entity providing institutional services that were previously provided by MLPF&S. As such, the institutional services previously provided by MLPF&S are now provided by BofA Securities. Retail broker-dealer services will continue to be provided by MLPF&S.”

One other – possibly, unintended – consequence of this shift is that MLPF&S did not file a FOCUS report on SEC Form X-17A-5 for 2018, as it did for the 17 years prior – or, at least, we haven’t found it yet. The new entity did not file one either. And, we’re pretty sure that ~$300 billion in total assets, placing it somewhere in the neighborhood of Morgan Stanley & Co., did not disappear…