Securities Lawyers Blog
The Financial Industry Regulatory Authority (FINRA) recently sanctioned MML Investors Services, LLC (MML Investors a/k/a MassMutual Life Insurance Company) broker Monte Miron (Miron) concerning allegations that Miron made unauthorized trades in client accounts and that the broker failed to disclose certain tax liens on his Form U4 in a timely manner.
Miron first became registered with member firm Dean Witter Reynolds Inc. in September 1982. Miron has been registered with 11 firms between October 1998 and August 2012. From 2005 to January 2008, Miron was associated with MetLife Securities Inc. From December 2007 through September 2012, Miron was a representative with AXA Advisors, LLC.
According to Miron’s brokerage disclosures the broker has had three customer complaints filed against him. The complaints involve allegations of account manipulation, excessive trading, and a misrepresentation concerning a variable annuity.
Unauthorized trading occurs when a advisor transacts in securities without the prior consent or authority from the investor. Unless a customer has given the broker written authority to have discretion to make trades in the account, the broker must first discuss all trades with the investor. NYSE Rule 408(a) and FINRA Rules 2510(b) and 2020 prohibit discretionary trades in a customers’ non-discretionary accounts. Unauthorized trading also violates just and equitable principles of trade and constitutes violations of federal anti-fraud statutes. Unauthorized trading is fraudulent in nature because it is an omission of material information to the investor.
Between September 2012, and January 2013, FINRA alleged that Miron made 237 unauthorized trades in the accounts two customers. FINRA found that Miron did not obtain written authorization to make these trades prior to executing them and he was not allowed to have control over client accounts. By making these unauthorized trades, FINRA found that Miron violated FINRA Rule 2010.
FINRA also found that the 237 unauthorized trades were mismarked as unsolicited. By not properly marking the 237 trades in question as solicited, FINRA determined that Miron caused the firm’s books and records to be inaccurate.
FINRA rules also provide that brokers must file amendments to Form U4, an information disclosure device, no later than 30 days after learning of the facts and circumstances giving rise to the amendment. In this case FINRA found that Miron was subject to three credit companies from May 2010, through March 2012, that were required to be reported on his Form U4. However, according to FINRA, the credit compromise on May 14, 2010, was not reported on Miron’s U4 until June 30, 2011. In addition, FINRA found that the credit compromise of November 15, 2010, was not reported until December 22, 2011. Another credit compromise on March 11, 2012, was not reported until August 17, 2012. In all three instances, FINRA found that Miron willfully failed to timely update his U4 violating FINRA Rules 1122 and 2010.
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