Articles Tagged with Merrill Lynch

Stoltmann Law Offices is a Chicago-based securities and investment fraud law firm that offers representation to investors nationwide on a contingency fee basis. We are currently investigating “selling away” claims involving Merrill Lynch and a financial advisor from their San Francisco office, Richard Hogan. The most important take-away from this post is to understand it does not matter that Merrill Lynch calls it, if the misconduct involved investments and clients, Merrill Lynch is responsible for the conduct of its agent – full stop.  “Selling away” is a securities industry moniker used to deflect responsibility for unapproved investment recommendation by rogue brokers.  The law makes it clear that the firm, Merrill Lynch, has an obligation to supervise their broker’s conduct and the law also allows for investors to make agency-based claims agains Merrill Lynch too.

According to a recent filing by the Financial Industry Regulatory Authority (FINRA), Richard A. Hogan conceded to a twelve month ban and a $10,000 fine as a result of an investigation by the regulator into alleged misconduct committed by Mr. Hogan. According to FINRA, Hogan participated in “private securities transactions” involving three Merrill Lynch clients and about $630,000 in Asia-based funds. the funds were a Hong Kong based equity fund and a Vietnam based equity fund. FINRA further stated that Mr. Hogan misrepresented to Merrill Lynch what his involvement was in these funds, which Merrill Lynch apparently did not offer on their platform.  Once Merrill Lynch found out otherwise, in July 2020, Merrill Lynch fired him.

“Private Securities Transaction” is more securities industry code for investments made or solicited by brokers “outside” of the firm with whom they are registered. Brokers like Hogan have an obligation under FINRA Rule 3280 to disclose transactions of this nature and receive approval from the firm, before participating in it.  According to FINRA, Hogan never disclosed that he recommended these Asia-Fund investments to firm clients, which was something he was required to disclose.  Hogan then became a very easy mark for FINRA to exercise its police power over registered brokers, suspend, and fine him.

Chicago-based Stoltmann Law Offices is representing investors who’ve suffered losses from dealing with broker-advisors who’ve executed unsuitable short-term trading strategies. When a broker takes your money in and out of investment products intended to be held long term, like Unit Investment Trusts or mutual funds, the brokerage firm can be liable for any losses sustained.

FINRA, the U.S. securities industry regulator, recently concluded a sweep of Unit Investment Trust (UIT) sales that resulted in a combined $16.8 million in restitution payments and $6.6 million in fines against six firms, according to Advisorhub.com. UITs are mutual-fund-like vehicles sold by brokers that carry high up-front fees or “loads”.

The regulator reached a settlement with two Wells Fargo Advisors broker-dealers “that agreed to pay $3.1 million in fines and restitution over failure to supervise improper short-term trading of UITs. The sanctions, which were levied against the firm’s core Wells Fargo Clearing Services broker-dealer and Wells’ independent Financial Network unit, included almost $2.5 million in restitution and $650,000 in fines.” The FINRA sweep previously “also hit Merrill Lynch, which paid the lion’s share of the penalties with $11.65 million in fines and restitution, as well as Stifel Nicolaus & Co., Cambridge Investment Research, and Oppenheimer & Co.”

Chicago-based Stoltmann Law Offices has represented investors who’ve suffered losses in the LJM Preservation and Growth Fund. When broker-dealers sell you investments, they are responsible for fully informing you of the risks at the point of sale. When they fail to give you an honest, transparent disclosure on what they are selling – and the investments tank — you may have an arbitration case that you can pursue to get your money back.

Cambridge Investment Research, Merrill Lynch, and other brokerage firms sold a mutual fund called the LJM Preservation and Growth fund to their customers. The fund’s “value plummeted 80% over two days in early February 2018, after brokers in the previous two years sold $18 million of its shares to more than 550 customers, prompted by sales calls in May 2016 from an LJM wholesaler,” the securities regulator FINRA stated. “The fund was liquidated and dissolved in March 2018.”

What made the fund so volatile that led to its demise? It employed a risky strategy called “uncovered options,” but failed to tell investors that it was a highly complex vehicle prone to catastrophic losses.

Chicago-Based Stoltmann Law Offices has been representing California investors before FINRA arbitration panels for many years. We are looking into allegations made by an investor that allege that Ryan Raskin, who was registered with Merrill Lynch until he was discharged for cause in March 2020, executed unauthorized trades for a client. Merrill Lynch denied that complaint outright, which is a common practice used by brokerage firms when clients come to them with a complaint without being armed with an experienced FINRA investor-rights lawyer.

According to a story published by AdvisorHub.com, Raskin was employed with Merrill Lynch since 2016. On January 13, 2021, Mr. Raskin was barred by FINRA for failing to respond to requests for information. FINRA has the authority, under FINRA Rule 8210, to seek information and documents from any licensed, registered representative, even after the are terminated or are not working in the securities industry. As part of their enforcement mandate to enforce securities law and regulations, FINRA is given pretty broad discretion to seek out information related to its investigations, and in the event a broker like Raskin refuses to cooperate or ignores a valid request for information from FINRA, the penalty is a lifetime ban from the securities industry.  Sometimes brokers do this because they are out of the business and don’t really care if they lose their license to provide investment advice. Sometimes brokers ignore FINRA because they have something serious to hide.

Mr. Raskin was discharged from Merrill Lynch in March 2020 for “conduct involving business practices inconsistent with Firm standards, including inappropriate investment recommendation.” The impetus for FINRAs Rule 8210 request was this discharge by Merrill Lynch, which was reported to FINRA on Form U-5. Although the FINRA Acceptance, Waiver, and Consent (AWC), which was signed by Mr. Raskin, does not state any specific allegations with respect to misconduct. Still, Merrill Lynch discharged Mr. Raskin for “inappropriate investment recommendations” and one customer did make a complaint against him for unauthorized trading.

Chicago-based Stoltmann Law Offices has represented investors who’ve suffered investment losses at the hands of financial and investment advisers who churned and burned their accounts. One of the most prevalent abuses in the securities industry is excessive trading, or “churning” client accounts. This practice, which is forbidden by industry regulators like FINRA and the SEC, is done to generate commissions, almost always at the expense of the client. As the stock market swings wildly during the Covid-19 pandemic, brokers take advantage by trading their clients’ accounts to generate commissions.

Brokers can open the door to churning by asking customers if they want an “active” trading strategy, which gives brokers discretionary ability to trade at will. Unless clients give specific directions on how and when to trade, brokers may take the opportunity to trade excessively and charge needlessly high commissions.

Churning has been the subject of numerous regulatory actions over several decades. Broker Frank Venturelli, a representative for First Standard in Red Bank, New Jersey, was cited by FINRA for excessive trading between 2016 and 2018. According to FINRA settlement, clients lost more than $373,000 during that period. Venturelli was suspended from the industry for 11 months and ordered to pay partial restitution of $30,000 to his clients.

Stoltmann Law Offices is investigating allegations that Linan Abrego (aka Ma Rosa Linan Abrego) misappropriated client funds at Merrill Lynch. According to published reports,  Abrego was barred by FINRA for failing to appear or respond to an inquiry in connection with her termination from Merrill Lynch on June 10, 2019 for misappropriating client funds. The misconduct reported by FINRA alleges that Linan Abrego of McAllen, Texas, failed to appear as required by FINRA Rule 8210 and accepted a lifetime ban from the securities industry, instead of answering FINRA or providing information in furtherance of FINRA’s investigation. According to her publicly available FINRA BrokerCheck Report, Ms. Linan Abrego was registered with Merrill Lynch as a broker and financial advisor from December 6, 2016 to June 10, 2019 when she was terminated for cause by Merrill Lynch for “misappropriating client funds.” Pursuant to FINRA Rule 8210, if FINRA requests a broker sit for on the record testimony (called an OTR) and the broker either refuses or simply does not show up or refuses to provide answers to written questions, or refuses to produce documents requested by FINRA in the course of their investigation, this can be grounds for being permanently barred from the securities industry. It is the equivalent of a career death sentence. Once a broker is barred for life by FINRA, absent extraordinary circumstances, that person will need to seek a career change.

Typically, brokers who refuse to show up for a Rule 8210 request do so knowing they are sacrificing their securities licenses. Some brokers may be near retirement or are not interested in maintaining their licenses, so they rather not submit themselves to an OTR, which can be stressful and require retaining legal counsel. Other brokers fail to show up for an OTR because they fear the testimony they will give may be incriminating if they are truthful. The FINRA AWC agreed to and signed by Ms. Linan Abrego only states he failed to show up for the OTR and provides no further explanation for barring her from the securities industry. Linan Abrego did this willingly, and instead of providing testimony from FINRA about why she was fired by Merrill Lynch, she chose to accept a lifetime ban from the securities industry.

Routinely, financial advisors who steal money from their clients do it in such a manner which should have alerted the firm’s compliance or supervision departments. Many times this sort of theft is facilitated by the broker simply forging withdrawal forms or requests. Another common way brokers steal money is to set up a third party LLC or other entity to which the broker directs client money directly from their accounts through wire transfers.  Sometimes the clients allow these transfers because the broker tells them these transfers are an investment in a company, or it’s where her commissions are paid to. No matter the ruse, sophisticated brokerage firms like Merrill Lynch are required to have procedures in place to catch their brokers if they attempt to steal client money. Whether there were unauthorized withdrawals or transfers from your accounts, every FINRA brokerage firm, like Merrill Lynch must have robust Anti-Money Laundering rules and regulations in order to ensure a level of alertness in these circumstances. Failing to properly execute these procedures which results in a broker stealing client money results in liability for the firm for negligent supervision, putting Merrill Lynch on the hook for the losses.

AdobeStock_199789587-300x200The Financial Industry Regulatory Authority (FINRA) recently barred Marcus D. Parker, from the industry. Marcus Parker allegedly failed to respond to a FINRA investigation against him. FINRA was investigating him for misappropriating funds from client accounts, and other things. At the time, Parker was associated with Wells Fargo in Santa Fe, New Mexico. Wells Fargo may be liable for investment losses, because the firm had a duty to reasonably supervise Marcus Parker while he was registered there. Because it did not, we may be able to help you bring a claim against Wells Fargo for failing to supervise.
Marcus Duane Parker, according to online, FINRA records, was previously registered with Dean Witter Reynolds, Thomson McKinnon Securities, Prudential Securities, Painewebber, Salomon Smith Barney, Merrill Lynch in Santa Fe, New Mexico from September 2001 until September 2008, and Wells Fargo in Santa Fe from September 2008 until December 2017. He has one customer dispute against him alleging suitability, and one regulatory matter. He has been permanently barred from the industry. Please call our Chicago-based offices today for a free consultation with an attorney about your options. Attorneys are standing by to take your call. There is no obligation.

AdobeStock_112465076-1-300x164The Financial Industry Regulatory Authority (FINRA) barred former LPL broker Laura Shean from the industry for allegedly converting approximately $124,000 in customer funds between March 2017 and October 2017. Shean allegedly made tax payments for her own benefit to the IRS by improperly directing the IRS to debit funds from a customer’s brokerage account. The payments totaled $124,000. This resulted in a permanent bar from the industry by FINRA. Shean was previously registered with Merrill Lynch in New York, New York from March 1996 until March 1999, and LPL in Medford, Oregon from March 1999 until November 2017. She has one customer dispute against her, one regulatory pending matter, one investigation and one employment separation after allegations. She is not currently registered as a broker.

According to a recent InvestmenNews article, Merrill Lynch has reached an agreement with the Securities and Exchange Commission (SEC) related to its sale of shares of a Chinese software company that has been found to be operating a fraud scheme. The SEC claimed that Merrill failed to perform proper due diligence functions in the unregistered sales of shares of Longtop Financial Technology Ltd. Merrill Lynch will be required to pay a penalty of $1.25 million and more than $154,000 in disgorgement and prejudgment interest from commissions and fees earned on the improper sales. The bank also agreed to be censured and consented to the order requiring it to cease and desist from committing or causing any future violations of the registration provisions of the Securities Act. The distribution generated almost $38 million in proceeds for the overseas issuer and its affiliates. According to the case summary, from January 2011 until August 2011, Merrill violated the registration provisions of federal securities laws by effecting unregistered sales of nearly three million shares of Longtop Financial securities for a customer.

AdobeStock_17723177-1-300x175According to a recent Letter of Acceptance, Waiver and Consent (AWC) with the Financial Industry Regulatory Authority (FINRA), Pavel Shklyar was accused of violating industry rules and regulations. FINRA was investigating Shklyar for his participation in potential private securities transactions, and he did not provide requested documents to FINRA. This resulted in an automatic bar from the industry. Previously, Pavel Shklyar was registered with Josephthal & Co., Bernard L. Madoff, Credit Suisse, Salomon Smith Barney, ICAP/Investment Services and Trading, RBC Professional Trader Group, Merrill Lynch and J.P. Morgan in Norwood, New Jersey from January 2015 until February 2018. He is not currently registered as a broker and was barred from the industry, according to his online, public records with FINRA. If you or someone you know lost money with Mr. Shklyar and would like to bring a claim against J.P. Morgan for your losses, please call us today to find out how to do so on a contingency fee basis in the FINRA arbitration forum.

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