Ex-Merrill Lynch FA Pleads Guilty to Stealing $1M
A former Merrill Lynch advisor pled guilty to siphoning off $1 million from two of his clients, Law360 reports.
From 2010 to 2013, Alec Rivera lied to his Merrill Lynch colleagues, convincing them to make more than 100 cash transfers from client accounts as if they were requested by the customers, according to the legal news website.
The money went to the Philippine American Chamber of Commerce of Greater Chicago, from which Rivera, who had access to the accounts, then wrote himself checks, as reported previously.
Prosecutors say the chamber didn’t know about Rivera’s scheme, according to the legal news website. Meanwhile, Rivera had his clients’ real account statements sent to himself and instead sent his clients falsified statements not reflecting the transfers to the Chamber, Law360 reports.
Merrill Lynch fired Rivera in 2013 after revelations of the fraud, according to Finra. Rivera’s sentencing is scheduled for August, and he faces up to 20 years in prison, Law360 writes. Because he has pled guilty, it’s more likely the prosecutors will recommend three and a half to four years, according to the legal news website.
In a separate matter, the SEC has charged a former registered representative with putting his clients into unsuitable investment products and misappropriating $170,000, the regulator says in a complaint.
Demitrios Hallas allegedly invested five of his clients in daily leveraged exchange-traded funds and notes, whose inherent complexity and volatility are only suitable for sophisticated investors — yet the five customers had limited investing experience and modest incomes and assets, the SEC says. Hallas allegedly made 179 trades in ETFs and ETNs from September 2014 and October 2015, racking up $128,000 in commissions and fees, the SEC claims. His customers, meanwhile, allegedly suffered $150,000 in net losses, according to the complaint.
In addition, Hallas allegedly received $170,750 from an unnamed customer with no other retirement funds, purportedly for investments, the SEC says. Instead Hallas allegedly spent the funds on personal expenses, hiding the activity from the customer, according to the complaint.
Hallas was registered at a total of 11 brokerages from March 2001 to November 2015, the SEC says. He was registered with Santander Securities from May 2013 to May 2014, according to the SEC. All customers involved in the SEC’s complaint had accounts with Hallas while he was with Santander, but one client had been with him since 2011, when Hallas was registered with Chase Investment Services. From August 2015 through July 15, Halls was registered with Forefront Capital Markets, the SEC says. Forefront withdrew its broker-dealer registration, however, and Hallas registered with PHX Financial until November 2015. He’s no longer registered with any broker-dealer, the SEC says.
Hallas has previously settled with Finra over allegations of unsuitable investments, according to the complaint. In June 2014, Finra suspended Hallas for 30 days and ordered him to pay a $5,000 fine and $6,110 in restitution connected to his recommendations that two of his Chase customers liquidate their investments and put them into mutual funds, the SEC says in its complaint. Finra said at the time that Hallas had no reasonable basis to make the recommendation, but the transition incurred his customers unnecessary fees, according to the SEC’s complaint.