Welcome to Financial Advisor IQ
Follow

FA Misdeeds: Merrill, Morgan Stanley Brokers Get the Boot

July 30, 2015

Finra has been busy doling out punishments to miscreant brokers this past week, giving some hint as to what it views worthy of a slap on the wrist and what calls for permanent exile.

A former Merrill Lynch veteran of 33 years, who was accused of pushing clients into commission-based accounts, has been barred from the brokerage industry. Meanwhile, two Morgan Stanley brokers have been allowed to stay on with the company after Finra ordered it to pay a $2.3 million fine for mismanaging accounts. But their colleague, who front-ran customer trades in his own account, got fired, according to The Wall Street Journal.

Indiana-based Tom Buck, a top Merrill advisor, was accused by Finra of overcharging customers by steering them toward commission-based rather than fee-based accounts and misleading them about the differences between the two, the Journal reports. Around 80% of Buck’s accounts were commission-based, while in the rest of the Indiana branch where Buck worked, 70% of the accounts were fee-based, says the paper.

Merrill fired Buck in April for “failing to discuss service level and pricing alternatives with a customer,” according to a U5 filing cited by the Journal.

But Buck landed just fine at RBC Wealth Management and brought along his two daughters to boot — for a while, anyway. RBC has since fired Buck for misrepresenting himself, a spokeswoman tells the Journal. The spokeswoman says one of Buck’s daughters, Ann Buck — a former Merrill advisor, and earlier a cheerleader with the Indianapolis Colts — now leads her dad’s practice.

Meanwhile, a Finra arbitration panel awarded a group of investors $2.3 million of the $4.4 million sought in damages stemming from alleged mismanagement of customer accounts and suspect trading by Morgan Stanley brokers from 2008 to 2012, reports the Journal in another article.

Fred Brister was accused of failing to supervise Steven Wyatt and Hilary Joseph Zimmerman, who allegedly mismanaged the accounts. But Morgan Stanley has kept Brister and Zimmerman, according to BrokerCheck data cited by the Journal.

Wyatt, however, was fired back in 2012, according to his BrokerCheck profile cited by the paper. A lawyer representing the investors who won the award against the three brokers told the Journal Wyatt purchased stocks in his personal account before buying the same in his customers’ accounts, usually at higher prices — then he sold his shares before selling his clients’, this time at generally lower prices.

By Alex Padalka
  • To read the Wall Street Journal article cited in this story, click here if you have a paid subscription.
  • To read the Wall Street Journal article cited in this story, click here if you have a paid subscription.