Merrill Lynch has been fined $300,000 by the Financial Industry Regulatory Authority (FINRA) for failing to supervise the actions of a former broker who ultimately stole millions of dollars from a client.
Broker and Conman Defraud Pro Athlete
Former Merrill Lynch broker Eva Weinberg pled guilty to defrauding former professional football player Dwight Freeney. With help of purported con man Michael Stern, (who was Weinberg’s former boss), Weinberg stole millions of dollars from Mr. Freeney after she had left Merrill.
Although the multi-million-dollar theft took place after Weinberg left her Merrill employment, FINRA accused the firm of failing to follow up on flagged emails and failure to discover the former broker’s association with a well-known con man.
Dwight Freeney sued Bank of America and Merrill Lynch for $20 million, alleging forgery and other charges, and ultimately settled for $13 million.
Broker and Con Man Defraud Pro Athlete
According to FINRA, the broker worked at Merrill’s Miami office for a short period of time with a team that focused on working with professional athletes. After gaining access to Freeney’s financials, she left Merrill Lynch and with Stern and started a scheme in which she opened a purported wealth management firm of her own. She then became Freeney's business manager and financial planner having control over his bills, taxes, savings, and salary. Thereafter, she participated in the theft of millions of dollars from Freeney.
According to BrokerCheck, Weinberg worked in the brokerage industry from 1988 through 2004, after which she went to work for a real estate company owned by Michael Stern. Stern is a known South Florida businessman with a history of criminal activity, making headlines for bribing public officials in connection with his real estate dealings.
When Weinberg applied to work at Merrill Lynch, she omitted her five-year employment for Stern, a fact that surely would have raised a red flag.
Weinberg and Stern Serving Prison Time for Fraud
Weinberg is currently serving prison time for wire fraud. Stern is also in prison for reasons related to the defrauding of Freeney.
Merrill Lynch Has History of Failure to Supervise
According to the settlement documents, Merrill failed to comply with regulatory rules that required it to adequately maintain employee supervisory systems and to keep broker registration records accurate and updated.
Merrill Lynch has been fined before in relation to monitoring and reporting brokers’ misconduct. In January 2014, Merrill was fined $175,000 for failing to submit U4 and U5 amendments reflecting two customer complaints about brokers misappropriating funds. In 2012, Merrill consented to a $500,000 fine for the firm’s failure to reflect complaints, arbitrations, and civil litigations.
Have You or Someone You know Lost Money as a Result of Stockbroker Misconduct?
Brokerage firms are obligated to supervise their brokers. If they fail to do so and a broker’s misconduct causes you financial harm, you may have a claim to recover your investment losses. If you or someone you know lost money as a result of stockbroker misconduct, contact an experienced investment fraud attorney at Dimond Kaplan & Rothstein, P.A. today.
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