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Ex-Merrill Lynch FA Suspended Over Kiting Scheme

By Alex Padalka May 24, 2018

Finra has suspended a former Merrill Lynch broker and fined him $5,000 for check kiting, according to a letter of acceptance, waiver and consent published by the industry’s self-regulator.

Fuad Habba, who has been in the industry since 2004, worked at Merrill from 2012 until April 2016, Finra says. From January to March 2016, Habba wrote and deposited five checks totaling $2,765 from bank accounts that had been closed for several years, according to the letter of consent.

Merrill first accepted the checks and credited his account but eventually rejected them, Finra says. But Habba had withdrawn funds from his own Merrill checking account after each of the deposits, according to the letter of consent. In effect, by withdrawing funds that would not have been available without the bad checks deposited into the account, Habba received unauthorized loans from Merrill Lynch, thus engaging in check-kiting, Finra says.

Merrill, a unit of Bank of America, fired Habba in April 2016 for “conduct inconsistent with Firm policy related to his personal bank accounts,” according to the letter of consent. This week, Finra suspended Habba for three months and ordered him to pay a $5,000 fine, the regulator says.

(Getty)

After getting fired from Merrill, Habba joined Morgan Stanley, according to his BrokerCheck profile. Habba was terminated from that position about two months ago, according to the letter of consent, and hasn’t registered with another firm, according to BrokerCheck.