By Matthias Rieker
The Financial Regulatory Authority, Wall Street's
self-regulator, fined Bank of America Corp.'s Merrill Lynch, saying
the brokerage took a year to report allegations that one of its
financial advisers was siphoning money from client accounts.
Finra fined Merrill $175,000, saying an initial Oct. 26, 2011,
customer complaint against the adviser, Greg Campbell of Clayton,
Mo., and a similar complaint from May 25, 2012, weren't reported to
the regulator until Oct. 26, 2012. Both customers accused Mr.
Campbell of withdrawing money from their accounts and other
misdeeds.
While the complaint went unreported to Finra, Mr. Campbell left
Merrill Lynch on Oct. 29, 2011, and joined an LPL Financial
Holdings Inc.-affiliated firm a short time later, Finra said.
According to authorities, at his new firm, Mr. Campbell continued
to steal money from customers; in all, Mr. Campbell misappropriated
more than $1.7 million from customers at Merrill Lynch and more
than $500,000 from clients at the LPL-affiliated firm, Finra
said.
Mr. Campbell was fired from the LPL-affiliated firm after
Merrill Lynch disclosed the complaints.
Mr. Campbell pleaded guilty to federal wire fraud charges in
2013 and was sentenced to 38 months in prison. He had set up credit
lines secured by clients' securities portfolios, mostly without
their knowledge, and taken money to pay his mortgage, car loan and
other expenses, according to Finra documents. His victims included
relatives and an 85-year-old client with dementia, according to
Finra.
Asked to comment on the fine, a Merrill Lynch spokesman said,
"When we became aware in 2012 that two client complaints had not
been reported in a timely manner, we took appropriate disciplinary
action." The clients were reimbursed for all stolen funds,
according to Finra documents.
A spokesman for LPL said the firm reimbursed its clients. He
declined further comment.
Firms are obligated to report customer complaints against their
brokers to Finra within 30 days and the regulator posts them on the
publicly available BrokerCheck site.
Finra said it had noticed an increase in such reporting failures
across the industry. It said it had brought 138 cases by the end of
November 2014 against firms for failing to update brokers' public
records, up from 103 such cases for the full year 2013.
Last week, the regulator said, in its annual examination
priority letter, it is making changes to its registration review
process to address the issue. "This includes a public records
review of all active registered persons," Finra said.
Write to Matthias Rieker at matthias.rieker@wsj.com
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