Finra Suspends Ex-Merrill Rep Who Sought Covid-Relief Loan for Ersatz Business
The Financial Industry Regulatory Authority issued a seven-month suspension against a former Merrill Lynch registered rep as it continues its pursuit of brokers who it found improperly sought pandemic relief loans.
Batista “recklessly misrepresented” that she owned since December 2018 a property management business which earned $35,000 in the 12 months before January 31, 2020, but lost $15,000 because of the pandemic, the letter said. She received the full amount requested in the month following her application, Finra said.
The regulator, as in other similar cases this year, found Batista violated its ‘catch all’ Rule 2010, which requires representatives to “observe high standards,” and bars “any unethical business-related misconduct, regardless of whether it involves a security,” according to the Finra letter.
Batista, who signed the Finra letter without accepting or denying the findings, did not respond to a request for comment sent through social media. A Merrill Lynch spokesperson declined to comment
Finra did not impose a fine because it said Batista’s financial statements demonstrated inability to pay. She has not been registered with Finra since October 2020 when she was terminated by Merrill over the same allegations.
Batista repaid the loan with interest after her termination from Merrill, the settlement letter states.
Finra said that Batista had made plans to rent a room in her house through an online vacation rental service, but she had not listed it prior to January 31, 2020, despite her claim on the loan application.
“Prior to submitting the application, Batista did not review the Economic Injury Disaster Loan program requirements to determine her eligibility,” Finra wrote. “Indeed, Batista authorized a casual acquaintance, whom she met at a party, to complete the application on her behalf from her cell phone using information she provided to him.”
Finra began its investigation of Batista’s loan after Merrill Lynch terminated her and filed the Form U5. The regulator’s investigation of Batista was not part of its examination of registered representatives, first disclosed in January, who applied for the SBA’s Paycheck Protection Program or other Covid-relief aid programs, a person with knowledge of the investigation said.
In July, Finra fined and suspended a former broker with Wells Fargo Advisors who allegedly sought to borrow through the EIDL program. Kenric Sexton, who had been a broker for six years with Wells in Charlotte, North Carolina, agreed to a $2,500 fine and one-month suspension, after Finra alleged he “negligently misrepresented” that he operated his self-directed online trading account as a sole proprietorship and received a $1,000 advance through EIDL.