Merrill Lynch Fined $15.2 Million By FINRA

Merrill Lynch was fined $15.2 Million ($13.4 Million plus interest) by Financial Industry Regulatory Authority (FINRA). It allegedly charged consumers exorbitant fees for mutual fund transactions. Merrill was not penalized for the infraction due to its “exceptional cooperation”.

Mutual fund issuers offer several classes of mutual fund shares, including Class A and C. Class A shares are subject to a front-end sale fee. Class C shares don’t. On the other hand, Class C shares have higher yearly expenses and are often subject to a deferred sale charge.

Many mutual fund issuers offer discounts for customers who purchase enough Class A shares. They also offer no sales tax if they meet certain volume limits.

Merrill Lynch’s automated system was created to prevent Class C share transactions when Class A shares were made available at NAV or at a discounted price. Although the automated system accurately calculated customer purchases and fund holdings. However, FINRA stated that the system applied a Class C share purchase limit that was incompatible with a fund’s Class C limit purchase limit or a threshold for when Class A stocks were available at net assets value. This resulted in thousands of clients buying Class C shares and paying fees and charges when Class A shares were more affordable.

According to FINRA, Merrill Lynch customers paid $13.4 million in additional fees and costs between January 15 and January 2021.

FINRA praised Merrill’s “extensive inquiry” into the firm’s systems related to Class C mutual funds sales following the discovery. It was hailed by FINRA for its “exceptional cooperation and significant help.” A substantial fee was also paid to an independent expert by the company to identify affected customers and to “promptly create” a remedy plan for them.

Merrill Lynch, a full-service brokerage company, offers sales, trading, research, and underwriting services through approximately 31,000 agents. In January 2009, Merrill Lynch was an indirect, wholly-owned subsidiary of Bank of America Corporation.

How to File a Financial Advisor Complaint

Filing a financial advisor complaint is a good way to get redress for problems you have with your financial advisor. However, you need to be careful when filing a complaint. If you file it without proper research, it is likely to be dismissed without a proper hearing. Here are some tips to file a complaint:

The first step in filing a complaint is to contact FINRA. FINRA is a separate regulatory body from the U.S. government. They regulate the financial industry and enforce federal securities and foreign exchange laws. If you feel your complaint has merit, you should contact the FINRA or your state securities regulator. An attorney will help you file the complaint, review it and protect you during the arbitration. Here are the steps involved.

If the complaints are resolved, you can also file them with the Securities and Exchange Commission, the government agency that regulates securities professionals. The SEC can investigate complaints against financial advisors and take action, or dismiss them without any action. However, you should first seek the advice of an SEC-approved financial advisor before filing a complaint. A financial adviser’s qualifications should also be investigated by the SEC. It should be able to prove that he or she is qualified to provide investment guidance.

A financial advisor’s record can tell you a lot about the quality of their services. Moreover, if you’ve had to deal with more than one financial advisor in the past, you may want to think twice about hiring them. In addition, you should know how they compensate themselves. Some charge hourly fees while others work on commission. Regardless of the way they make their money, a financial advisor’s past will remain on their record.

Contact us today if you believe your financial advisor did something wrong and we will give you a free consultation with one of our experienced investment lawyers.

source https://financialadvisorcomplaints.com/merrill-lynch-fined-15-2-million-by-finra/

John Jumper (ALLUVION SECURITIES) Sentenced to 78 Months For $5.7 Million Embezzlement

John Jumper was a former broker with Alluvion Securities who stole $5.7 million from Snowshoe Refractories (a Pennsylvania-based firebrick manufacturer’s pension plan benefit plan). Jumper was also ordered by Snowshoe Refractories to pay $2.4 Million in restitution. This reflects financial recoveries made by Snowshoe Refractories. He will spend 78 months in prison, followed by three years of supervision.

According to United States Attorney John Gurganus, Jumper allegedly signed bogus documents allowing him to transfer funds from the pension plan three more times between March 2015 & April 2016.

The embezzled funds were used to purchase an Arkansas tubing facility and three other businesses. He also used them to repay $1.2million in personal debts and pay his legal bills.

He also had a personal interest in the firms he bought with the embezzled money. The sale of Arkansas’ tubing company netted Alluvion Securities, his Memphis broker, more than $1,000,000 in fees.

According to the indictment, there were approximately 129 employees who were active or retired from the Snow Shoe Refractories employee retirement plan. When the $5.7 million fraud began, assets in the pension plan were valued at $9.8million.

Both the Securities and Exchange Commission and Financial Industry Regulatory Authority issued regulatory and civil sanctions against Jumper.

In November 2018, a federal judge in the Western District of Tennessee granted his motion for default judgment by the SEC. He was banned from violating securities laws and ordered to pay $5.7 million in fraudulent gains, $726,800 prejudgment interest, and to repay the money.

FINRA permanently disqualified Jumper from the securities industry in February 2017. This was due to claims that he had misused monies from Snowshoe’s pension plan for personal use and capital injections into Alluvion Securities, his member company.

With the assistance of the US Department of Labor’s Employee Welfare Services Administration, Financial Industry Regulatory Authority (FINRA), and the US Securities and Exchange Commission (SEC), the Federal Bureau of Investigation investigated this matter. George Rocktashel, Assistant US Attorney, prosecuted the case.

source https://financialadvisorcomplaints.com/john-jumper-sentenced-to-78-months-for-5-7-million-embezzlement/

FINRA Panel Asks Morgan Stanley and Advisor Francisco Valenzuela to Pay $330K For Fraud and Elder Abuse Claim

Morgan Stanley, along with one of its financial advisors, now former, Francisco Valenzuela, have been asked to pay $330K over several violations, including allegations of fraud, by an arbitration panel of the Financial Industry Regulatory Authority (FINRA).

The claim was filed by Carlos Ramon Tapia Sanchez in October 2020. Allegations included supervisory failure, conversion, fraud, and elder abuse, among several others. The claim is related “to various unspecified securities,” as per the award document published by FINRA. In addition to Morgan Stanley and Valenzuela, Merrill Lynch was also named as a defendant.

A total sum of $357,622 was sought, which included lawyers’ fees, apart from compensatory damages.

Sanchez, in March 2020, filed a voluntary dismissal of claims notice against Merrill, with prejudice. As per the award document, the arbitrators made no determination against Merrill Lynch for relief requests against them.

Are you a victim of investment fraud by Francisco Valenzuela? Contact Haselkorn & Thibaut, P.A. at 1-888-614-9356 for a free private consultation.

Record of Francisco Javier Valenzuela

Starting in the financial services industry in 1996, Valenzuela moved through six different firms before he joined Merrill Lynch in 2010. From there he moved to Morgan Stanley with whom he stayed till 2018, as per his BrokerCheck record.

Though Valenzuela had been barred by FINRA in July 2018, with effect from October 2018, for his failure, in a timely manner, to request for the termination of suspension, the bar was vacated by FINRA in November 2018.

Valenzuela was suspended by FINRA for 8 months in December 2019, effective January 2020. This was for his failure to disclose a material fact on the U4 Form.

After leaving Morgan Stanley in 2018, Valenzuela has not registered with any other firm.

The verdict

Both Morgan Stanley and Merrill Lynch denied any wrongdoing and sought a dismissal of the claim, including that of arbitration costs and lawyers’ fees, as revealed by FINRA

Valenzuela, it appears, failed to file an answer statement as well as a properly executed agreement of submission.

He was asked to pay $160,000 towards compensatory damages for fraud, manipulation, and misrepresentation, as per the award document. Morgan Stanley was asked to pay a matching amount to the claimant on account of supervisory failure and negligence.

Additionally, Morgan Stanley and Valenzuela were also asked to pay lawyers’ fees of over $10,000.

source https://financialadvisorcomplaints.com/finra-panel-asks-morgan-stanley-and-advisor-francisco-valenzuela-to-pay-330k-for-fraud-and-elder-abuse-claim/