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.
A sad end an otherwise great career.
Wake up No senior FA with LOS over 25 years ever does those CEs themselves.
Shocked I am…shocked! Round up the usual suspects….
Do the right thing and always have an out. Those of you at the wires should always be prepared for anything unexpected. Even if an innocent mistake. Not saying this was. Basically, always be prepared. You are not the owner of your book.
Ron is that you ?
You do not own your book. I know that & I am not industry just a whistleblower on the scams pulled on Financial Clients and Investment Advisors (a) you are not brokers despite what FINRA wants to call you (b) you do not own your book. The Morgan Stanley agreement I was given to look at shows every which way they own it. As for BI, I am behind the SEC racing to Best Interest based upon my whistleblowing how FINRA & SEC scam us. Embrace it if you are a good person. If you are bad, well then you knew the risk. Most important, FINRA has no oversight over you or me at that. I did get that confirmed in a VA Law for financial clients in the least
Maybe ML did not want to continue to pay them? Who knows? Do you think they will lose the remainder of their comp?
This sounds like a BS UBS move.
Pretty smart move from Merrill’s perspective.
Fire the only two advisors on the team and transition the assets to advisors that might be looking to move–locks those advisors (and assets) in to Merrill forever–even if the comp plan goes to salary plus bonus.
No loyalty from the wirehouses anymore.
Like said in an earlier comment, always have a plan B in place for the unexpected.
….and if fired for cause, the firm can keep any UNDISTRIBUTED benefits they gave you. Not unvested.. UNDISTRIBUTED. Go read your benefit plan. The longer you are with the firm, the bigger the price on your head.
Why would anyone leave their retirement package in the hands of Merrill management? They can (and will) make up anything to fire FAs.
It is true! ML (really BofA) will do anything they want to your U5 and dare you to spend at least $100k to attempt to get it expunged. They also know that the FINRA Arbitration system is completely rigged in their favor, so good luck in any attempt