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Regulatory Sanctions

Broker Risks His Career on a Friendship, And Loses

June 26, 2019

By Howard Haykin


What’s the true cost of friendship? For one Merrill Lynch broker it was his career.
The friendship began on an Amtrak commuter train from New Jersey to New York in the early 1990’s. At the time, the individual (“MJA”) was not a broker, though his fellow-commuter (“GW”) was. In 1996, MJA took the leap and joined the industry as a broker with UBS. By 2005, while with Morgan Stanley, he picked up his Series 9 and Series 10 Sales Supervisor licenses. All went swimmingly well until 2010, when friend GW needed a favor.



In 2010, friend GW was appointed as a trustee for the revocable trust of his brokerage client (“MBM”). In his capacity as trustee, GW opened several brokerage accounts away from his FINRA member firm – including 2 accounts with MJA at Wells Fargo Advisors (the “MBM Trust Accounts”).

The account opening documentation listed MBM as the primary owner and GW as trustee; GW’s occupation was falsely listed as “retired.” GW obviously aimed to keep his fiduciary relationship a secret from the broker-dealer with which he was associated.


In 2011, when MJA left Wells Fargo for Merrill Lynch, Pierce, Fenner & Smith, GW moved the MBM Trust Accounts to Merrill Lynch, and MJA continued to serve as the registered rep for the accounts.

Once again, the account opening documentation listed MBM as the beneficial owner and GW as trustee, while falsely representing GW as “NOT EMPLOYED.”


Over the next few years, MJA continued the ruse by falsely attesting on branch registration questionnaires that ‘none of his clients were employed by a broker firm that was a FINRA member’.



FINRA COMES CALLING.    For unstated reasons, FINRA began an investigation into improprieties related to the handling of the MBM Trust Accounts – specifically to determine whether MJA knew about GW's affiliation with a broker-dealer. Here's what ensued:


  • In August 2016, in response to FINRA's request for information, MJA submitted a written statement noting that, "[GW] said he was unemployed at the time the account was transferred. I knew his last place of employment to be [an investment bank] in NYC." MJA added that, "[GW] did not tell me he was a registered representative at another broker dealer."


  • Shortly thereafter, MJA’s supervisor at Merrill Lynch interviewed MJA about FINRA’s inquiry. During the interview, MJA admitted to knowing that GW was a registered rep at a particular FINRA member firm and had been for many years, and that he (MJA) knew GW was a registered rep at the time he opened the MBM Trust Accounts. MJA also told his supervisor that GW, who was trustee for the accounts, opened accounts with MJA as broker of record because he "obviously" could not serve as the registered representative for the MBM Trust Accounts at his own broker-dealer.


  • The matter was escalated to upper-level management, and within a week, Merrill terminated MJA’s employment.


  • In March 2017, MJA provided on-the-record testimony to FINRA and once again lied about his knowing that GW was a registered rep.


  • In July 2018, MJA finally admitted to FINRA what he knew about GW.



This case was reported in FINRA Disciplinary Actions for June 2019.

For further details, click on ...  FINRA AWC #2016051389101.