Merrill Lynch Censured, Fined $300,000 for Failure to Supervise Miami Financial Advisor
Merrill Lynch (CRD#: 7691) — a large global banking and brokerage firm — has been censured by the Financial Industry Regulatory Authority (FINRA) and fined $300,000 for its failure to adequately supervise one of its former securities representatives. Unfortunately, this lack of proper supervision allowed serious financial advisor fraud to occur.
According to the Letter of Acceptance, Waiver and Consent (NO. 2014041490801) agreed to by Merrill Lynch, the financial representative in question (named only as ‘EW’) worked in the brokerage firm’s Miami office. During her time at the firm, she primarily offered financial advice and services to affluent professional athletes.
Miami Financial Advisor ‘EW’ Misappropriated a Professional Athlete’s Funds
While she was employed at Merrill Lynch, FINRA alleges that Miami financial advisor ‘EW’ cultivated a close relationship with an affluent professional athlete who was a client of the brokerage firm. While working with Merrill Lynch, ‘EW’ introduced the professional athlete to a man identified as ‘MS’ — supposedly a successful businessman. Notably, ‘MS’ had no relationship with Merrill Lynch. In reality, this individual was a fraudster. Eventually, ‘EW’ and ‘MS’ conspired to misappropriate millions of dollar from the athlete. Both ‘EW’ and ‘MS’ have since been arrested by law enforcement for financial fraud.
FINRA: Merrill Lynch Ignored Major Red Flags
FINRA alleges that Merrill Lynch ignored major red flags — thereby exposing its client to considerable financial risk. According to FINRA, Merrill Lynch’s internal supervisory system flagged several emails that were sent by ‘EW’ for review by the firm’s compliance department. For example, in one email, the language strongly suggested that ‘EW’ was engaging in improper, undisclosed private securities transactions. In another email, ‘EW’ misrepresented her title to the professional athlete investor. However, despite the supervisory system raising red flags, the emails were never escalated and the suspicious conduct was never actually investigated. Had a proper investigation of ‘EW’ occurred, the financial fraud could have potentially been prevented. As a result of its findings, FINRA concluded that Merrill Lynch violated securities industry rules related to supervising its representatives.
The Sanctions: Censure and Fine
Without admitting to or denying the allegations raised in this case, Merrill Lynch has consented to FINRA’s findings. The brokerage firm has been publicly censured by the agency and it has been ordered to pay a $300,000 financial penalty. In addition, Merrill Lynch also agreed to take further action to ensure that it has an effective supervisory system in place to protect its investors going forward.
Did You Lose Money as a Result of Brokerage Firm Negligence?
Get legal help now. At Carlson & Associates, P.A., we have extensive experience handling complex financial advisor fraud claims. If you suffered investment losses because a brokerage firm failed to properly supervise one of its brokers or financial advisors, please contact us today for a confidential case evaluation. From our office in Miami, we represent investors all over South Florida, including in Fontainebleau, Fort Lauderdale, Homestead, Miami Beach, and Coral Gables.
Resources:
brokercheck.finra.org/firm/summary/7691
finra.org/sites/default/files/fda_documents/2014041490801%20Merrill%20Lynch%2C%20Pierce%20Fenner%20%26%20Smith%2C%20Inc.%20CRD%207691%20AWC%20va.pdf