A recent FINRA regulatory settlement results in the fining and suspending of a dubiously incentivized former Merrill Lynch, Pierce, Fenner & Smith registered representative, who was also dually employed at the member firm's affiliated bank. FINRA seems to have gotten the rep dead to rights on the regulatory violation thing. On the other hand, FINRA just doesn't seem able or willing to disclose its member firm's "affiliated bank." All of which reminds us of the feared Lord Voldemort, whose name must not be spoken, and the lament of famed Wall Street regulator Ray Charles: You think you know me well. Well, you don't know me. No, you don't know me.
Case In Point
For the purpose of proposing a settlement of rule violations
alleged by the Financial Industry Regulatory Authority ("FINRA"),
without admitting or denying the findings, prior to a regulatory hearing, and
without an adjudication of any issue, Micheal Stupar submitted a Letter of Acceptance, Waiver and
Consent ("AWC"), which FINRA accepted. In the Matter of Micheal
Stupar, Respondent (AWC 2013039618501,
December 16, 2015).
In 2004, Stupar entered the securities industry and was first registered in 2005. As set forth in the AWC:
In September 2011, Stupar became employed as a GSR and Financial Solutions Advisor ("FSA"), dually employed by Merrill Lynch, Pierce, Fenner & Smith (the "Firm), a FINRA regulated broker-dealer, and its affiliated bank (the "Bank").
The AWC asserts that Stupar
had no prior disciplinary history in the securities industry.
SIDE BAR: Hmmmm . . . lemme see . . . just what could the name of Merrill Lynch's "affiliated bank" be? Could it be "He Who Must Not Be Named"? Could it possibly be that Lord Voldemort is Merrill Lynch's affiliated bank?
The FINRA AWC doesn't tell us the name of Merrill Lynch's "affiliated bank" -- maybe the self-regulatory organization doesn't want to tell us because it fears that the disclosure of such a secret might unravel the very fabric of the Universe. My, my, my, how will we ever figure out the identity of Merrill Lynch's "affiliated bank?"
I have an idea: How about we visit this august FINRA member firm's website at https://www.ml.com/ ? Oh, gee, look at the upper left corner of each webpage on Merrill Lynch's website and you will see the logo stating: Merrill Lynch / Bank of America Corporation. Have we broken the code? Should we all telephone or email FINRA with our discovery?
Another thing we could do would be to enter "Financial Solutions Advisor" into a search engine and follow any number of search results. Howsabout we look up this one: https://locations.merrilledge.com/ , where we are told at the bottom of the page:
Merrill Edge Financial Solution Advisors
Meet with a local Merrill Edge Financial Solutions Advisor located in Bank of America financial centers near you for advice and guidance to help you pursue your financial goals. Visit a financial center to meet one-on-one with a Financial Solutions Advisor or call us at 1.888.637.3343 24 hours a day, 7 days a week.
Playing along with FINRA's non-disclosure of the bank's identity, for the balance of this Blog. I will reference "FINRA member firm Merrill Lynch's affiliated bank" in lieu of the name that should not be spoken.
The AWC asserts that FINRA member firm Merrill Lynch's affiliated bank operated
the "Field Based Financial Solutions Advisor Incentive Compensation Program," ("FSA
Program"), which the AWC asserts was designed to incentivize Financial
Solution Advisors "to make themselves available in the banking centers and
cross-sell the Firm's and the Bank's products to customers in the banking
SIDE BAR: Me again. Hello there. How are you? I hope that you're fine and enjoying this Blog and these SIDE BARs. Just thought that I should tell you that I hate the word "incentivize." It's a phony baloney made-up word that consultants create to make a task seem way, way more important than it is; sort of like that job title: Financial Solutions Advisors. Oh . . . so they're not merely Financial Advisors but Financial "Solutions" Advisors? And the difference between the two job titles is what exactly? Hey, I don't want one of them plain vanilla Financial Advisors. No way! I want one of those Financial SOLUTIONS Advisors who can actual solve my investing problems.
Frankly, ya gotta love Wall Street, which is an industry that hires folks as Financial Solutions Advisors and then designs a "Field Based" "Incentive Compensation Program" in order to have these advisors "make themselves available." Of course, silly me, but I'm wondering just why these FSAs need to be incentivized to do what they are being paid to do in the first place. The AWC asserts that the FSAs are incentivized to "cross sell" Merrill Lynch's products to the firm's "affiliated bank" customers and to sell the affiliated bank's products to the firm's "affiliated bank" customers. Of course, self regulation being the serious undertaking that it is, let's not name the name of the FINRA member firm Merrill Lynch's affiliated bank.
I know, I have to get a life. Trust me, I'm working on it but, for now, just let me get these shots in and enjoy the opportunity, which, you know, incentivizes me to take on the high and mighty -- and, at times, laughable. All of this is in furtherance of my role as a Financial Solutions Regulatory Blogger (*FSRB").
Tracking Interactions and Conversations
Under the FSA Program, Stupar was to receive credit towards his monthly incentive compensation for, among other things, customer contacts. As contemplated under the FSA Program, Stupar was required to track his interactions and substantive conversations with banking-center customer in Merrill Lynch's Siebel communication management system. Among the data to be entered into Siebel would be conversations, meetings, and appointments involving existing and potential Merrill Lynch customers. The Siebel entries would purportedly be used to calculate Stupar's FSA Program compensation. Stripped down to its essence, the Siebel system is what is described as a Customer-Relationship-Management ("CRM") tool.
Wow!!! Look what's under this hood: CRM and FSA and incentivizing and all the other crap that Wall Street loves to acronym or fabricate in an effort to make the mundane seem nearly mystical.
Inflating the Incentivizing Program
The AWC asserts that Stupar knowingly entered false
information into Siebel in order to earn inflated credits. On August 15, 2012, for
example, the AWC alleges that Stupar entered into Siebel an indication that he
had spoken to a customer in the banking center, notwithstanding that Stupar was
not in the office on said date and had not spoken to the customer.
The AWC asserts that following Merrill Lynch's internal review of the FSA Program, Stupar was terminated after he was found to have improperly entered information into Seibel. According to online FINRA BrokerCheck records as of December 30, 2015, FINRA member firm Merrill Lynch indicated that he had been "Discharged" based upon:
ALLEGATIONS THAT THE REGISTERED REPRESENTATIVE IMPROPERLY OBTAINED COMPENSATION TO WHICH HE WAS NOT ENTITLED IN CONNECTION WITH BANK OF AMERICA BANKING TRANSACTIONS.
SIDE BAR: FSRB Singer here and, naaah, I'm not going to let it slide and, yeah, I did catch that! Amazing that the AWC is meticulous about not mentioning the name of FINRA member firm Merrill Lynch's affiliated bank but on FINRA's BrokerCheck website there doesn't seem to be any issue about naming "Bank of America." You think you can reconcile those seemingly disparate FINRA regulatory and disclosure policies? Hey, knock yourself out. Lord Voldemort must be very happy.
Violations and Sanctions
FINRA alleged that Stupar had made and caused to be made inaccurate entries in both Merrill Lynch and FINRA member firm Merrill Lynch's affiliated bank's record-keeping systems, resulting in his improper receipt of incentive compensation, in violation of FINRA Rule 2010. Additionally, FINRA found that Stupar's actions resulted in Merrill Lynch maintaining inaccurate books and records in violation of FINRA Rules 4511 and 2010 by causing the FINRA member firm to create and maintain inaccurate books and records in violation of Section 17(a) of the Securities Exchange Act of 1934 and Rule 17(a)-4 promulgated thereunder.
In accordance with the terms of the AWC, FINRA imposed upon
Stupar a $5,000 fine and a 30-calendar-day suspension in all capacities.
Bill Singer's Comment
As today's BrokeAndBroker.com Blog comes to an end and FINRA member firm Merrill Lynch's affiliated bank makes its way into the sunset, yes, listen, yes, if you're very quiet (and Lord Voldemort keeps it down) you can hear that unnamed bank softly, wistfully, lament:
You think you know me well.
Well, you don't know me.
No, you don't know me.