Merrill Lynch

Shepherd Smith Edwards & Kantas investigates Marcus Boggs, a former Merrill Lynch Financial Advisor

Published on: September 23, 2019 | by Shepherd Smith Edwards & Kantas, LLP

Shepherd, Smith, Edwards & Kantas (“SSEK”), a law firm specializing in representing wronged investors, is looking into allegations by the SEC against former Merrill Lynch financial advisor, Marcus Boggs (“Boggs”). Boggs reportedly joined Merrill Lynch in 2006, working in the company’s Chicago office. The SEC has alleged that Boggs stole client funds in excess of $1.7 million. The stolen assets were used to cover personal expenses, including credit card charges. According to the SEC, Boggs sought to portray himself as a pillar of the Chicago community, involving himself with various charities and attending social events in an effort to ingratiate himself with the city elite. Also, according to the SEC, Boggs maintained he managed of $40 million in assets for his clients.

Merrill Lynch fired Boggs over the SEC charges in December of 2018. Had Merrill been properly supervising Boggs, the company may have prevented some of the theft. According to FINRA, Boggs has three complaints on his official record all involving unauthorized transfers from client accounts. Merrill wisely sought resolution of these matters and it appears none have actually gone to hearing.

SSEK has experience in representing customers of financial advisors who either stole their money, or stole the money of other clients. SSEK’s experience shows that before a financial advisor begins stealing money, he or she often does other things that are wrong for clients, such as unsuitable investing, churning, unauthorized trading or other misconduct. Even after theft is uncovered, those other wrongs often go unnoticed and are never addressed without a customer hiring a law firm like SSEK.

Ex-Merrill Lynch Investment Adviser Accused of Stealing $1.7M

Published on: August 27, 2019 | by Shepherd Smith Edwards & Kantas, LLP

Marcus Boggs, a former Merrill Lynch investment adviser, is now facing US Securities and Exchange Commission (SEC) charges accusing him of using $1.7M of client monies to pay his own credit card bills. According to the regulator, Boggs, who was a Chicago-based RIA, illegally transferred funds from the accounts of three retail advisory clients on more than 200 occasions.

The firm fired him after finding out about the alleged misconduct, which would have taken place between 2016 and December 2018. Boggs was a registered investment adviser (RIA) with Merrill for 12 years, which was the entire time that he worked in the securities industry.

His job was to offer investment advice to clients, and Boggs didn’t have the authority or permission to liquidate the assets or trade in his alleged victims’ accounts. However, he allegedly went on to sell securities in said accounts and directly take money out of them for his own use.

CYES Strategy Investments Prove Too Risky for Investors

Published on: July 15, 2019 | by Shepherd Smith Edwards & Kantas, LLP

Over the last several months, it has come to light that brokers from some of the largest firms on Wall Street firms sold Collateral Yield Investment Strategies (CYES Strategies) that may not have been suitable for many investors, causing them to suffer devastating losses. Offered through registered investment adviser Harvest Volatility Management, LLC, the CYES Strategy is a type of Yield Investment Strategy (YES Strategy), only even more risky and complex.

YES Strategy Investments

Reportedly, UBS (UBS), Credit Suisse (CS), Bank of America’s (BAC) Merrill Lynch, Morgan Stanley (MS), and other brokerage firms brokers sold YES Strategies to many wealthy investors, touting the approach as safe way to increase returns on conservative portfolios. These were supposed to be small returns at a low risk, using a strategic approach that involved the purchasing and selling of SPX index options spreads.

Puerto Rico Retiree Plan Accuses UBS and Others of Bond Price Rigging

Published on: April 29, 2019 | by Shepherd Smith Edwards & Kantas, LLP

The Puerto Rico Government Employees and Judiciary Retirement Systems Administration, a pension plan for retirees of the U.S. territory’s government, has filed a proposed securities class action in federal court against Bank of America (BAC), Goldman Sachs (GS), Citigroup (C), Barclays Capital, Inc. (BARC), BNP Paribas Securities Corp., Bank of America Securities, Credit Suisse Securities, FTN Financial Securities, Deutsche Bank Securities, JP Morgan Securities, Morgan Stanley (MS), Merrill Lynch, Pierce, Fenner & Smith, and UBS Securities. The retirement fund is accusing the defendants of rigging bond prices to keep the prices up on Freddie Mac and Fannie Mae bonds.

Freddie and Fannie, both U.S. government-sponsored entities (GSEs), offer bonds to raise money for loans. According to the Puerto Rico pension plan’s bond fraud case, the trading desks of the various banks worked together to artificially raise the prices of the GSE bonds when the market took a hit after the 2008 financial crisis and Fannie and Freddie started reducing the number of bonds issued for sale. This decrease led to a loss in profits for those underwriting and trading in Fannie Mae and Freddie Mac bonds. The plaintiff contends that instead of the banks opting to lower the difference between their purchasing and selling prices and competing for clients, they worked together to fix the bond prices so they could “maximize” their profits at the expense of customers.

The Puerto Rico retirement plan’s complaint comes weeks after another proposed class action was brought by two other pension funds also accusing banks of rigging the price of GSE bonds. The pension fund plaintiffs in that fraud case are the Trust and Sheet Metal Workers’ Local 19 Pension Fund and the Dallas Area Rapid Transit Employees’ Defined Benefit Retirement Plan. The defendants are Bank of America NA, Barclays Capital, Wells Fargo Securities, LLC, Citigroup Global Markets, Inc., BNP Paribas Securities Corp., Deutsche Bank Securities, JPMorgan Securities, HSBS Bank Plc, HSBC Securities, JP Morgan Chase Bank, TD Securities, Nomura Securities International Inc., and Merrill Lynch, Pierce, Fenner & Smith.

Investor Fraud: Former MML Investors Broker Who Sold $3.5M of Woodbridge Notes is Barred, Ex-Merrill Lynch Rep Gets 40-Month Prison Term for Defrauding Clients, and Barred UBS Broker is Sentenced in $3.7M Fraud

Published on: February 15, 2019 | by Shepherd Smith Edwards & Kantas, LLP

Ex-Merrill Lynch Broker Will Pay $5M Penalty and Serve Time In Prison

A federal judge has sentenced Thomas Buck, an ex-Merrill Lynch broker, to 40 months in prison. Buck pleaded guilty to securities fraud in 2017. As part of his plea, he admitted to lying to Merrill about telling clients about their account options, and, at certain times, making trades for them without getting their approval.

That year, the US Securities and Exchange Commission (SEC) had filed a complaint against Buck accusing him of making over $2.5M in excessive commissions and fees from more than four dozen clients. The SEC contends that Buck placed clients into accounts that charged them commissions instead of ones that were fee-based and not as costly. The regulator also accused him of making unauthorized trades. The Commission barred the former Merrill broker from the investment advisory and brokerage industries last year.

Finra Bars Fired Merrill Lynch Broker Accused of Falsifying Class B Mutual Fund Share Sales Orders

Published on: February 7, 2019 | by Shepherd Smith Edwards & Kantas, LLP

The Financial Industry Regulatory Authority (Finra) has permanently barred fired Merrill Lynch broker Bhenoy (Ben) Dembla. According to InvestmentNews, The former broker was let go from the financial firm in 2016 for “falsifying documents” related to mutual fund sales.

Dembla, who worked for Merrill the entire time he was a broker from 2001 to 2016, is accused of submitting fake sell orders to get around the firm ’s electronic order system protections. The protections should have stopped the submission of Class B share purchase orders once these had exceeded the accumulation limit.

According to FINRA, Dembla would submit the bogus sell orders, which the system would accept, and then he would cancel the orders. All of this made it possible for certain customers to go over Class B share thresholds with their purchases.

Merrill Lynch to Pay $300K to Settle Inadequate Supervision Allegations

Published on: December 14, 2018 | by Shepherd Smith Edwards & Kantas, LLP

The Financial Industry Regulatory Authority (FINRA) is ordering Merrill Lynch to pay $300K after finding that it did not properly supervise former broker Eva Weinberg, who went to prison for defrauding former NFL football player Dwight Freeney. Merrill, which is now a wholly-owned Bank of America (BAC) subsidiary, consented to the fine and censure imposed for not properly investigating and overseeing Weinberg even after the firm had internally flagged three of her emails and a $1.7M default judgment had been rendered against her in a civil case. (It should be noted that this case is not listed on her BrokerCheck record but was reported by InvestmentNews.)

What Weinberg’s BrokerCheck record does state is that she began working in the industry in 1988, but then in 2004 she took several years away to work at a real estate company owned by a man named Michael Stern, who is also now in prison for defrauding Freeney. Even before Freeney, however, Stern already had a criminal record.

FINRA said that when Weinberg applied to Merrill for employment in 2009, she did not mention the years she had spent working for Stern. The broker-dealer went on to hire her in their Miami office where she worked with professional athletes, including Freeney. She is the one who introduced the former NFL player to Stern.

FINRA Bars Ex-Texas Based Brokers from Merrill Lynch and RBC Capital Markets

Published on: November 14, 2018 | by Shepherd Smith Edwards & Kantas, LLP

The Financial Industry Regulatory Authority has barred three more former brokers in the wake of fraud allegations against them. Two of them were based in Texas. They are:

Former Merrill Lynch broker Terrance Hood
Ex-RBC Capital Markets broker Jonathan Freehill

Securities Fraud Allegations Against Former Merrill Lynch/RBC Financial Adviser Could Lead to More Unauthorized Trading and Failure to Supervise Claims

Published on: August 14, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Earlier this year, the US Securities and Exchange Commission barred ex-RBC broker Thomas Buck from the industry. The action came less than four months after the regulator filed a civil case accusing Buck of investor fraud. He allegedly made material misrepresentations and omissions to investment advisory clients and certain customers while he was a Merrill Lynch financial adviser in order to get get paid excess fees and commissions.

As a result, more than 50 customers and clients under Buck ended up paying over $2.5M unnecessarily.

Buck also allegedly did not tell clients that they could have saved money if only they’d opted for a fee-based payment structure instead of the commission model. Meantime, he’d told Merrill Lynch compliance staff on several occasions that the clients knew about the less costly options.

Merrill Lynch to Pay $425M to the SEC and $5M to FINRA for Misusing Customer Funds and Misleading Investors About Structured Notes

Published on: June 23, 2016 | by Shepherd Smith Edwards & Kantas, LLP

Merrill Lynch will pay $415M to resolve civil charges accusing the firm of misusing customer funds and not safeguarding customer securities from creditor claims. According to the Securities and Exchange Commission, the firm violated the regulator’s Customer Protection Rule by using customer funds inappropriately instead of depositing them in a reserve account.

Instead, said the SEC, Merrill Lynch took part in complex options trades that artificially lowered how much in customer funds needed to be in the reserve account. This liberated billions of dollars a week from ’09 to ’12. The firm used the funds for its own trades. If Merrill had failed with these trades there would have been a substantial shortfall in the reserve account.

Merrill Lynch, which is owned by Bank of America (BAC), has admitted wrongdoing as part of the settlement.

The SEC said that the firm violated the Customer Protection Rule when it didn’t abide by the requirement that customer securities that had been fully paid for be kept in lien-free accounts and protected from third parties claims in the event that Merrill Lynch were to collapse. Such a failure would have exposed customers to great risk and there would have been uncertainty as to whether they’d be able to get their securities back.
Also, contends the Commission, from ’09 to ’15, Merrill held up to $58B of customer securities a day in a clearing account that was subject to a general lien to be handled by its clearing bank.