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Regulatory Sanctions

Merrill’s Largesse to Employees is Met with Theft

May 1, 2019

By Howard Haykin


An individual who was associated with Merrill Lynch (initially in a non-registered capacity and then as a Series 7 Registered Rep) was also employed by its affiliated Bank as a Customer Service Sales Specialist. The Bank offered to reimburse eligible employees for certain out-of-pocket childcare expenses paid directly to the childcare provider.


WHAT WENT WRONG.    From January 2016 through January 2017, the individual converted Bank funds by submitting to the Bank reimbursement requests for childcare expenses that she had not incurred. All told, she submitted approximately 10 reimbursement requests to the Bank for childcare expenses - amounting to $9,015.


On each submission, the individual gave particular dates for which she claimed to have paid a daycare facility for childcare services. Each such submission was accompanied by a signed certification representing that the information provided therein was accurate and that she had obtained original signatures from the childcare provider verifying receipt of her payment.


When the Bank later investigated her submissions, the individual further misled the Bank by falsely stating that her claimed childcare expenses were legitimate. 


By falsely converting Bank funds, this individual violated FINRA Rule 2010. In February 2017, Merrill Lynch accepted her voluntary resignation, noting that she had submitted “inaccurate personal child care reimbursement request forms.” The for-cause Form U5 prompted a FINRA investigation.
FINRA concluded its investigation by barring the individual from the industry.



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

For further details, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2017053741501.