Fired Merrill Broker Absconded with Client Info in a Duffel Bag: Finra
The Financial Industry Regulatory Authority has fined and suspended a former Merrill Lynch broker in New York who allegedly filled a duffel bag with client information to bring with him to another firm, according to a letter of settlement finalized on Monday.
The regulator suspended Zaro, who had joined Merrill in 2018 after a rookie year at AXA Advisors, for one month and ordered him to pay a $5,000 fine.
Zaro, in retaining customer information following his discharge, caused Merrill to violate the Securities and Exchange Commission’s Regulation S-P concerning privacy, which, in turn, triggered for Zaro a violation of Finra’s ‘catch-all’ Rule 2010 requiring representatives to “observe high standards of commercial honor and just and equitable principles of trade,” according to the settlement.
Zaro, who is not currently registered as a broker, did not respond to a request for comment sent via social media. His attorney, Jenice L. Malecki, with an eponymous firm in New York City, also did not respond to a request for comment on the matter or if Zaro plans to register with another brokerage firm.
Merrill had expelled Zaro in October 2019 for “[c]onduct involving sending confidential and proprietary information to a personal email address and internally transferring client assets inconsistent with firm standards,” according to the firm’s U5 notice.
Upon returning from a trip, on October 25, 2019, Zaro attempted to access his Merrill office after regular working hours but was denied entry as his key card had already been deactivated, according to the Finra letter, which also said Merrill had “decided to wait until he returned from his trip to inform him” of his termination.
However, Zaro returned the next day, on a Saturday, and was “given access by a coworker” to the office, when he allegedly removed the customer files and stowed them in his duffel bag, the letter said.
After Merrill had discovered Zaro’s customer files were missing, the firm on October 30, 2019, demanded that Zaro return the files, at which point he gave the files to a “nonaffiliated third party of the firm,” to deliver to Merrill in a sealed box on his behalf the following day, the letter said. The third party was not identified in the letter.
Finra also found that Zaro had used the non-public personal information he obtained in order to contact his former customers, who were not notified of the disclosures or given an opportunity to opt out.
Following his exit from Merrill, Zaro in March 2020 registered with Emerson Equity, in San Mateo, California, and in January of this year moved to Invicta Capital, in Monroeville, Pennsylvania, for a brief stay that culminated last month, according to his BrokerCheck report. He is also founder and president of GM Capital Private Wealth, established in November 2019, with locations in New York, Wyoming, Colorado, California and Chicago, according to his LinkedIn profile.
A Merrill spokesman declined to comment beyond the firm’s U5 language for Zaro’s termination. Aimee Toth, chief executive at Invicta, did not respond to a request for comment.