The other shoe has dropped for former top Bank of America Merrill Lynch broker Thomas Buck, who was fired for the firm in March amid a number of allegations, including failing to discuss pricing alternatives with clients.
The Financial Industry Regulatory Authority Inc. has barred Mr. Buck, who had joined RBC Wealth Management, from associating with any Finra member firm, according to
a letter of settlement posted to the regulator's website on Tuesday. The regulator went a step further, accusing Mr. Buck of improperly charging customers and unauthorized trading.
Mr. Buck had been Merrill's top broker in Indiana, overseeing $1.3 billion in assets.
Finra said that since at least 2009, Mr. Buck decided to use commission-based accounts although it would have been less expensive for clients to remain in fee-based accounts. About 80% of Mr. Buck's accounts were commission-based, while 70% of the accounts in Merrill Lynch's Indiana Complex were fee-based, according to the letter of settlement.
“During this time period, [Mr.] Buck also misled clients about the potential advantages of using fee-based accounts in order to keep clients in higher-cost commission-based accounts,” Finra wrote.
In addition, Mr. Buck placed trades on behalf of clients without obtaining proper authorization, according to Finra.
“He at times unilaterally placed trades in customer accounts without getting the customers' acquiescence in advance, or even after placing the trade,” Finra wrote. “In other instances, customers explicitly or implicitly allowed him to place trades in their account without prior discussion. Buck did not obtain written authorization to do so from either the customers or Merrill Lynch.”
Mr. Buck, who accepted the bar without admitting or denying the charges, could not immediately be reached for comment. An attorney for Mr. Buck, David E. Robbins, was traveling and referred comment to co-counsel Timothy K. Ryan, who did not immediately respond to a message seeking comment. In April, Mr. Buck told
InvestmentNews that he was “totally blindsided” by the termination and was hoping to find a new firm and move on. He did not discuss specific allegations.
“I'm thinking I'm going into the back nine of my career and going to leave a nice legacy,” Mr. Buck, 61, said at the time.
A spokeswoman for RBC, Jonell Lundquist, said that the firm is “deeply committed to careful management of the wealth clients entrust to us,” and said that Finra's accusations were not consistent with what Mr. Buck told RBC during the hiring process.
When Mr. Buck was hired, another spokeswoman for the firm, Nichole Garrison, said that the firm was pleased to hire him and his team, which includes his daughter, Ann Buck, and that they have a “long history in this industry and solid reputation of providing excellent client service.”
“We are greatly disappointed to learn of these actions by Tom Buck, who is no longer with the firm,” Ms. Lundquist said. “These actions are entirely inconsistent with the representations he made to us during the hiring process and stem from conduct that occurred while Mr. Buck was employed with another firm. They are in no way related to any activities during his time with RBC.”
Ms. Buck remains at RBC, according to Finra registration records. She had not been accused of any wrongdoing and had resigned from Merrill to follow her father.
Merrill Lynch discharged Mr. Buck in March for allegations that he had failed to “discuss service level and pricing alternatives with a customer, providing inaccurate information to firm management during account reviews regarding this issue, mismarking bond cross trade order tickets as unsolicited, and providing information to a client during an active account review.”
Steven B. Caruso, a former president of the Public Investors Arbitration Bar Association and partner with Maddox Hargett & Caruso PC, which was not involved in the case, said that he was surprised at how quickly Finra took action.
“That's really unbelievable as far as the timing goes,” he said. “I think the rapid nature of the Finra response is indicative that there seem to be substantial allegations that warranted Merrill firing him in the first place.”
Mr. Caruso said that it seemed that the focus on top brokers such as Mr. Buck represented a “mindset change” by Finra and other regulators who were looking to show top brokers would be subject to the same penalties regardless of the revenue they generated for their firm.
“Finra along with other regulators has been subject to a lot of criticism as far as only crushing the little guys and letting the big guys get off with a slap on the wrist,” he said. “If it continues, this is indicative of a mindset change where everybody is going to be held to the same standards on the same rules.”
Mr. Caruso said that Finra could potentially take action against Merrill Lynch over supervision claims involving Mr. Buck, given the allegations stemmed from as far back as 2009.
“That's kind of a long time for nobody to catch on,” he said. “But you can't rush into these things.”
Following the termination, Mr. Buck accrued nearly a dozen customer complaints, mostly for unsuitable investments and unauthorized trading, according to his
BrokerCheck record. Some have been settled or while he chose to fight others. Although there were no monetary penalties, BrokerCheck shows that some of the complaints have been settled. Those payments are generally made by the firm.
Mr. Buck's March firing came as a part of a string of high-profile terminations over the past year, including a
$2.5 billion Merrill Lynch team in Rochester, N.Y., and LPL's
axing of a top branch manager in October.
In a separate instance, Merrill Lynch also this month
terminated a broker on a $2.5 billion team in Los Angeles over allegations of “inappropriate workplace behavior.”
A Bank of America Merrill Lynch spokesman, William Halldin, declined to comment beyond saying that the firm had fully cooperated with Finra.
