Ex-Merrill, RayJay Broker Settles Finra Charges of Taking Client Info
Michael Jeppson successfully cleaned his regulatory record last year of charges that he “exceeded the scope of the Broker Protocol” over client information he took with him when moving to Raymond James from Merrill Lynch in 2017, but he accepted Financial Industry Regulatory Authority sanctions on Monday for privacy law violations over the incident.
Finra fined Jeppson $5,000 and suspended him for 15 days from working as a broker, it said. As is typical, the advisor accepted the sanctions without admitting or denying the findings.
The penalty winds down a three-year legal battle that entangled Jeppson, Merrill and Raymond James in claims, counterclaims and cross-claims over his solicitation of clients and, ultimately, his claim that RayJay defamed him in a U5 termination filing that referenced his failure to admit to Protocol violations. An arbitration panel last November ordered Raymond James to expunge the dismissal language.
The unencrypted emails Jeppson allegedly sent himself included account lists and reports labeled “sensitive client information” that included asset allocations and total performance data, according to Finra. The Protocol for Broker Recruiting allows brokers to take just five pieces of customer contact information when moving among signatory firms.
Raymond James, which was not a party to this week’s settlement, was ordered to change Jeppson’s record to reflect that he had left voluntarily in 2019.
The Finra privacy sanctions illustrate the shoals brokers must navigate when shifting firms.
Merrill had initially filed claims against Jeppson for breaching employment contracts when he joined Raymond James on February 21, 2017, with the client data. RayJay said at the time that Jeppson was producing $1.8 million in annual revenue on around $400 million in client assets at Merrill.
The wirehouse sought to enjoin use of the client information and to receive compensatory and punitive damages, lawyers’ fees and costs from the broker and Raymond James. The parties reached confidential settlements.
Jeppson, who first registered as a securities rep 35 years ago with Merrill, did not return a request for comment on his settlement over the privacy charges this week. The sanctions do not affect his ability to practice as an RIA—whose activities are regulated by states or the Securities and Exchange Commission—and he does not have to pay the fine until he seeks to re-affiliate with a broker-dealer or applies for relief from the sanctions.
His RIA, Jeppson Wealth Management, was managing $366 million for 595 client accounts as of December 2019, according to its latest ADV filing with the SEC.
In addition to his almost 15 years at Merrill and his two years with RayJay, Jeppson worked for more than 16 years at Lehman Brothers and successor Smith Barney, according to his BrokerCheck history.
He sent an unencrypted email to himself with a file called “Sensitive Client Information.” This guy must be a total idiot.
Hahaha, you know, I thought the exact same thing. Then I looked at his AUM and his business, and I got lost in thinking how thankful I was to have been an average student that worked hard, caught a break or two, and had a great career. I decided, guy’s out produced my best years, who knows how.