By MICHAEL WURSTHORN | www.wsj.com
The Financial Industry Regulatory Authority permanently barred former Merrill Lynch financial adviser Tom Buck from the brokerage industry, accusing him of fraudulently causing clients to overpay for services and for engaging in unauthorized trading, according to documents published on Finra’s website on Tuesday.
Mr. Buck, who once oversaw $1.3 billion of client assets and spent nearly all his career at Merrill Lynch in Indianapolis until he was fired in April, neither admitted nor denied the allegations made by Finra, but he agreed to be barred from the industry, according to the order dated July 24.
A message left on Mr. Buck’s home telephone wasn’t immediately returned. His attorney,David Robbins, of Kaufmann Gildin & Robbins LLP, didn’t respond to telephone calls seeking comment.
A Merrill spokesman said the firm has “cooperated fully with Finra and will continue to do so.”
Mr. Buck, a broker for 33 years, had been employed by RBC Wealth Management, the wealth arm of the Royal Bank of Canada, since his departure from Merrill Lynch. An RBC spokeswoman on Tuesday said the firm was “greatly disappointed to learn” of Finra’s findings about Mr. Buck’s actions and said he no longer worked there.
Since at least 2009, Mr. Buck had steered clients into commission-based brokerage accounts, which charge customers for each transaction made, instead of accounts that carry a flat annual fee regardless of activity, Finra said. “In some instances, clients paid substantially more in commissions than they would have paid in fee-based accounts,” Finra said in the order.
Mr. Buck also “misled clients about the potential advantages of using fee-based accounts in order to keep the clients in higher-cost commission-based accounts,” Finra said. Roughly 80% of Mr. Buck’s accounts were commission-based, while about 70% of the accounts in Merrill’s Indiana branches were fee-based.
Mr. Buck also conducted trading in some client accounts without authorization beginning in or before 2011, Finra said.
Mr. Buck had been a well-known broker at Merrill Lynch due to his long tenure and high level of production. He managed more than a dozen employees. The team, known as the Buck Group, generated $6 million to $10 million in revenue annually, said Finra, of which at least 85% was attributable to Mr. Buck.
In March, Mr. Buck walked into what he thought to be a routine meeting with his managers, but instead he was escorted from the building and eventually fired, Mr. Buck previously told The Wall Street Journal in an interview.
Merrill Lynch dismissed Mr. Buck for reasons including “failing to discuss service level and pricing alternatives with a customer,” the brokerage said in a so-called U5 filing viewed by the Journal. A U5 is a confidential document that typically explains a broker’s departure or dismissal.
At the time, Mr. Buck described the firing as a “kick in the gut” and said he was unaware of the issues raised by Merrill.
Since his dismissal, nearly a dozen complaints have been filed against Mr. Buck, alleging unauthorized or excessive trading had taken place in client accounts, according to his record on BrokerCheck, Finra’s database on brokers and financial advisers. Some complaints have been dismissed, while others are pending, but five have been settled for damages totaling about $784,000.
Typically, the brokerage firm pays the settlements to clients.
RBC, which also hired two of Mr. Buck’s daughters, including Indianapolis Colts cheerleader and former Merrill Lynch adviser Ann Buck, said Mr. Buck’s “actions are entirely inconsistent with the representations he made to us during the hiring process and stem from conduct that occurred while Mr. Buck was employed with another firm.”
Both of Mr. Buck’s daughters continue to be employed by RBC, the spokeswoman said, adding that Ann Buck will now lead her father’s practice.