Merrill Fires Multi-Million-Dollar UHNW Pair for Cheating
In another reminder of the dangers of taking compliance shortcuts, Merrill Lynch Wealth Management has terminated the seasoned leaders of a San Francisco private wealth team for failing to complete mandatory training requirements.
Hogan, a former accountant at KPMG, also was accused of two selling-away violations by introducing clients to third parties selling investments off of Merrill’s platform and co-investing with them without approval from the firm.
His partner, Christopher R. Berry, was let go for the same training violations, according to the summary of his discharge.
Their five-person team, the Arc Group, generated between $3 and $4 million in annual revenue, according to a source familiar with their practice. Hogan and Berry are listed as the sole advisors on the team, according to their former Merrill website.
In writing that Hogan and Berry failed to safeguard personal log-on credentials, Merrill is implying that they had other team members log in under their names to complete the required modules, according to people familiar with the firm’s compliance policies. The firm used similar language in documenting the dismissal of Bruce K. Lee, a former private wealth star in Chicago who sources said was discharged in 2018 for having a subordinate complete his training update.
Brokerage firms industry-wide have stepped up mandatory training requirements in light of the Securities and Exchange Commission’s new Regulation Best Interest rule that requires brokers to document why they are making particular investment product recommendations.
Hogan, who ranked in 2014, 2017 and 2018 as a Financial Times “Top 400 Financial Advisor” and as a Barron’s “Top 1,200 Advisor” in 2014, 2015, 2016, 2017, and 2018, according to his Merrill Lynch biography, did not return a request for comment sent to a social media address.
Berry, a senior vice president and private wealth advisor who worked from a branch in Mill Valley, Calif., could not be reached for comment.
Hogan’s title of managing director designates significant production, and his additional designation as a senior consultant indicates his enrollment in the book-sale retirement plan that Merrill calls its “client transition program.”
He and Berry joined Merrill in 2002 and 2001, respectively, and each earlier worked at MyCFO Securities and Goldman Sachs. (Berry co-founded MyCFO’s investment advisory division, according to his Merrill web biography.)
Hogan began his securities industry career in 1988 as a trader at Salomon Brothers and Berry in 1996 as an investment banker at Lehman Brothers, according to BrokerCheck and their Merrill biographies.
Neither advisor has disclosure marks on their records aside from those designating their terminations. (Their registrations with Merrill officially ended on July 2.) The two associates and “private wealth manager” on their team remain with Merrill.
Lee, the former Merrill Chicago private wealth advisor who now runs a registered investment advisory firm and hedge fund, was suspended for 18 months from registering as a broker by the Financial Industry Regulatory Authority last year and fined $15,000 because of his alleged training module malfeasance.
A Merrill spokesman declined to comment on the dismissals.