The regulator also says Merrill had agreements with certain customers that it would only charge commissions equivalent for executing riskless principal trades.
Chertoff designated FEMA Director Mike Brown, the undersecretary for emergency preparedness and response, as the principal federal officer, or PFO, putting him in charge of the relief effort.
"People used to talk about each stock having a principal exchange, " says Daniel Mathisson, managing director in charge of a Credit Suisse division that uses computers to direct trades to the lowest-cost exchange at any given moment.