FINRA’s Department of Enforcement investigated Merrill Lynch and discovered it failed to report to FINRA, in a timely fashion, that Campbell misappropriated customer assets when Merrill Lynch received customer complaints concerning the misconduct in 2011 and 2012. Specifically, FINRA alleges Merrill Lynch received a written complaint on October 26 2011 from a customer alleging unauthorized activity in his IRA and personal accounts managed by Campbell at Merrill Lynch. FINRA further alleges Merrill Lynch received another customer complaint on May 25, 2012, concerning substantially similar misconduct. Nevertheless, Merrill Lynch failed to amend Campbell’s Form U5 Notice of Termination or otherwise report either written customer complaint until October 26, 2012.
Merrill Lynch’s failure to update or amend Campbell’s Form U5 Notice of Termination was significant because Campbell was terminated from his new firm as soon as Merrill Lynch reported the misappropriations. Unfortunately, between the time Campbell was terminated from Merrill Lynch in October 2011 and when Merrill Lynch finally reported the misappropriations in October 2012, Campbell misappropriated another $500,000 from customer accounts at the new firm. As a result, Merrill Lynch is liable for the misappropriations at the new firm as well.
Based upon the foregoing misconduct, FINRA alleged Merrill Lynch violated several financial industry rules including FINRA Rules 4530(a) and 2010, as well as Article V, Section 3 of FINRA’s By-Laws. For example, Section7.E of the Form U5 requires each firm to disclose whether the terminated person was “the subject of an investment-related consumer-initiated written complaint” alleging “that the individual was involved in one or more sales practice violations,” including misappropriation. Here, it is clear Merrill Lynch received at least two customer complaints in October 2011 and May 2012, but nonetheless, failed to update Campbell’s Form U5 Notice of Termination or otherwise report either written customer complaint until October 26, 2012.
Lufrano Law, LLC is a national securities litigation firm and has experience representing investors who have investment disputes with brokers and broker-dealers. If you lost money investing with Merrill Lynch due to Campbell’s misconduct, you may be able to recover your losses through FINRA arbitration. Our firm only receives a fee if you recover money. Please contact one of our attorneys at (800) 627-2179 to schedule a free consultation.