Merrill Lynch

Marylin Meyers Formerly of Allstate Financial Services Suspended Over Selling Away Activities

April 11, 2014 | by Staff Attorney

The Financial Industry Regulatory Authority (FINRA) sanctioned broker Marylin T. Meyers (Myers) $20,000 and barred her for two years concerning allegations between September 2009, and February 2011, she participated in a series of private securities transactions totaling approximately $1,000,000 without notifying her firm, Allstate Financial Services, LLC (Allstate) or obtaining the firm’s written approval. FINRA alleged that Meyers recommended that five investors invest in On The Edge and she helped facilitate their purchases of On the Edge Notes. On The Edge is a California based company formed to be a supplier of consumer goods such as tents, folding chairs, wagons, and promotional items related to retailers. To date, On The Edge has failed to repay the principal and interest due to the investors.

Meyers first became registered with FINRA in 1986 with Merrill Lynch, Pierce, Fenncr & Smith Incorporated. In 2001, Meyers became associated with Metlife Securities Inc. Thereafter, in July 2004, Meyers joined Allstate until her termination on May 17, 2012.

The allegations against Meyers are typical of a “selling away” violation. A broker sells away from their brokerage firm when they solicit securities that were not approved by the broker’s affiliated firm or recorded on the firm’s books and records. NASD Rule 3040 requires an associated person to provide written notice to the firm prior to participating in any private securities transaction. An associated person is prohibited from participating in any manner in the private securities transaction without the Firm’s approval. Under FINRA Rule 3010, brokerage firms are required to supervise their brokers and implement supervisory procedures reasonably designed to detect and prevent violations of NASD Rule 3040.

Ronald Anglin Investigated by the SEC Over Charges of Securities Fraud

January 15, 2014 | by Staff Attorney

The Securities and Exchange Commission (SEC) instituted administrative proceedings against broker Ronald Gene Anglin (Anglin), formerly of Merrill Lynch, Pierce, Fenner & Smith Inc. (Merrill Lynch), on allegations that Anglin engaged in securities fraud by forging letters of authorization from a Merrill Lynch customer to be sent by mail to addresses designated by Anglin.

From 2004 through October 2008, Anglin was a registered representative of Citigroup Global Markets, Inc. Thereafter, Anglin was a registered representative of dually registered broker-dealer and investment adviser Merrill Lynch until May 2011. Anglin also was an investment adviser representative for Merrill Lynch. Anglin is 38 years old and is a resident of Canyon Country, California.

On October 4, 2012, Anglin pleaded guilty to one count of mail fraud before the United States District Court for the Central District of California in U.S. v. Ronald Gene Anglin, 2:12-CR-00232-SJO. On March 25, 2013, Anglin was sentenced to three years of probation including 27 months in home detention, and ordered to make restitution in the amount of $73,000.

Former Merrill Lynch Broker David Zeng Barred From the Financial Industry

November 21, 2013 | by Staff Attorney

David G. Zeng (Zeng) was recently barred from the financial industry by The Financial Industry Regulatory Authority (FINRA) over allegations that the broker failed to respond to the regulator’s inquiries concerning at least a dozen customer disputes initiated against the broker. The customer complaints against Zeng include claims of misrepresentations, fraud, unsuitable investments, and unauthorized trading concerning stock investments.

It is also possible that Merrill Lynch, Pierce, Fenner & Smith Inc. (Merrill Lynch), Zeng’s employing firm during the majority of the customer complaints, failed to properly supervise Zeng’s securities activities. Under FINRA Rule 3010, a brokerage firm is obligated to properly monitor and supervise its employees. The rule states that “[e]ach member shall establish and maintain a system to supervise the activities of each registered representative…that is reasonably designed to achieve compliance with applicable securities laws and regulations…” Thus, brokerage firms are responsible for monitoring a broker’s investment recommendations to clients, outside business activities, and representations to investors.

Zeng became registered with FINRA in 2001 at Morgan Stanley Dean Witter Inc until June 2005. From June 2005 until May 2009, Zeng was associated with UBS Financial Services, Inc. Thereafter, from April 17, 2009, until December 20, 2011, Zeng was employed by Merrill Lynch and worked out of the firm’s Santa Fe, New Mexico office.

Former Waddell & Reed and Merrill Lynch Stockbroker Fined and Suspended for Misconduct

October 6, 2013 | by Staff Attorney

FINRA has fined Maryland financial adviser and investment counselor Jill Meredith Carr $10,000 and suspended her for two years from the securities industry. According to the letter of acceptance, waiver and consent (“AWC”) submitted by Ms. Carr, she entered the securities industry in 2007 with Merrill Lynch until her termination for “failure to meet performance standards” in 2008. She then worked for Waddell & Reed, Inc until her termination in July 2012 when she was terminated for forging customer signatures. Brokers and investment advisers the forge customer signatures constitute a form of securities fraud.

According to the AWC, from December 2011 through June 2012, Carr forged signatures of at least 15 Waddell & Reed customers on at least 24 forms. Carr also altered information on other account forms after the forms were signed by the customers. Specifically, in connection with firm-required suitability updates, Carr forged the signatures of at least six customers on at least 12 update forms without their knowledge, consent, or authorization. In addition, she forged at least five additional signatures, allegedly as an accommodation to those customers. By forging the signatures, FINRA found that Carr violated FINRA Rule 2010. Finra Rule 2010 states that “A member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade.”

Pursuant to FINRA Rules, brokerage firms rely on customers’ stated objectives and profiles to determine whether the investment objectives and the broker recommendations are consistent. It is important that investors and their brokers fully understand these objectives. It is imperative that these objectives be properly stated. Here, FINRA’s fine and suspension reflects the importance of these documents.

Turker Ergun Barred From Financial Industry for Alleged Misappropriation of Customer Funds

September 5, 2013 | by Staff Attorney

Turker Ergun (Ergun) settled charges brought by the Financial Industry Regulatory Authority (FINRA) concerning the sale of private securities and misappropriating customer funds by accepting a bar from the securities industry.

From January 2004 until December 2008, Ergun was associated with WaMu Investments, Inc. From December 2008 through October 2009, Ergun was associated with Banc of America Investment Services, Inc. After Banc of America, Ergun was associated with Merrill Lynch, Pierce, Fenner & Smith, Inc. (Merrill Lynch) until September 2012.

Ergun’s public records do not disclose any businesses, other than his previous brokerage employers, that he was involved with. However, in August 2012, Merrill Lynch filed a U-5 termination form reporting that Ergun was discharged following an internal review concerning conduct involving recommending a customer’s purchase of securities not offered by the Merrill Lynch and accepting personal loans from a customer without firm approval.

Karl Hahn Ordered by FINRA to Pay An Investor $11 Million

August 28, 2013 | by Staff Attorney

Former Merrill, Lynch Pierce, Fenner & Smith, Inc. (Merrill Lynch), Deutsche Bank Securities (Deutsche Bank), Inc., and Oppenheimer & Co., Inc. (Oppenheimer), broker Karl Edward Hahn (Hahn) was ordered by the Financial Industry Regulatory Authority (FINRA) to pay former clients over $11 million for misconduct in April 2013. Hahn was accused of common law fraud, negligent misrepresentations, and breach of fiduciary duties.

Hahn worked at Merrill Lynch from 2004 until 2008, at Deutsche Bank from 2008 to mid-2009, and at Oppenheimer from 2009 to early 2011. Hahn allegedly recommended various unsuitable investments to customers including covered calls, a premium financed life insurance policy, and $2.3 million fraudulent real estate financing project “involving East Coast” properties. Hahn allegedly recommended the life insurance policy for the the large commissions he stood to earn. Hahn also allegedly pocketed the money that was supposedly going to finance the East Coast properties.

Other claims made against Hahn include churning of investment accounts. Churning is a type of financial fraud where the broker engages in excessive trading in a client’s account for the purpose of generating commission but does not provide the investor with suitable investment strategy.