SEC Bans Ex Merrill Lynch Rogue Broker for Stealing Client Funds
Most of the rogue stockbroker cases we deal with involve brokers selling unsuitable investments. Many otherwise honest financial professionals are too easily lured by the promise of fat commission checks or exotic new investment schemes that promise above average returns. In many respects, some brokers are just like their clients; looking for something special that no one else has discovered. There is a difference, however. Brokers are paid to perform due diligence on behalf of their clients and protect them from Ponzi schemes and empty promises.
And then there are the thieves. Thankfully rare, some stockbrokers simply decide to steal. (That malady isn’t limited to brokers; we have seen lawyers, investment advisers and bankers succumb to the same temptations.) According to the industry publication InvestmentNews, the SEC has pulled the ticket of former Merrill Lynch broker James Lanier.
Lanier’s crime? Federal prosecutors say he stole money from his clients’ accounts to purchase a pick up truck, a condo and support his outside business interests.
Lanier was sentenced to almost 9 years in federal prison and ordered to pay $877,000 in restitution. How he can do that while earning 25 cents per hour in prison is anyone’s guess.
If there is any silver lining in this story, it’s that Lanier worked for Merrill. When a rogue broker works for some small firm, chances are great that the neither the firm nor the individual can pay back investors. Brokerage firms have a duty to supervise their employees but arbitration awards and restitution orders are meaningless without a “deep pocket.”
The other good news is that the SEC has permanently taken Lanier’s securities license. According to SEC Administrative Law Judge Carol Fox Foelak, “Lanier’s unlawful conduct was recurring and egregious. Extending over a period of several years, it involved hundreds of thousands of dollars.
We wonder why it took Merrill Lynch so long to catch Lanier and why it took the SEC over 3 years to yank his license. Especially since Lanier was convicted in criminal court last year!
Investment fraud and rogue stockbrokers will always be a problem. Although the SEC and the Financial Industry Regulatory Authority (FINRA) continue to crack down on investment fraud, clever criminals continue to find new ways to scam the system.
If you lost money in a Ponzi scheme, abusive tax shelter, bogus welfare benefit plan, or unsuitable investment, give us a call. We have helped victims recover millions of dollars. We concentrate in pursuing the people who sold these investments or assisted them.
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Post by Brian Mahany, Esq.