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Regulation and Compliance > Federal Regulation > SEC

Ex-Merrill Broker Denied Early Prison Release

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An Indiana judge turned down a request by an ex-Merrill Lynch broker who had requested early release from prison based on concerns over his health and COVID-19.

In February 2019, former Merrill rep Thomas Buck was sentenced by Judge James R. Sweeney II of U.S. District Court for the Southern District of Indiana to 40 months for one count of securities fraud after Buck was found guilty of charging excessive commissions and fees to clients.

On May 12, Buck’s attorney, Pat Shoulders, a partner at Evansville, Indiana law firm Ziemer, Stayman, Weitzel & Shoulders, filed a motion that the former broker be immediately released from prison based on his age (66) and medical history in light of the COVID-19 pandemic.

“Tom is over age 65 and has chronic asthma and immune deficiency health issues; should he contract COVID-19 he would be at risk for serious, life-threatening illness,” Shoulders told ThinkAdvisor on Monday.

“Prisons are petri dishes for the development and spread of this disease,” he said, adding: “He poses no risk to society and could serve his time on home confinement — much like more celebrated defendants” including President Donald Trump’s former campaign chairman, Paul Manafort.

U.S. Attorney General William Barr, after all, “has directed the Bureau of Prisons to release prisoners like Tom,” and “we had hoped to accelerate that process” in the case of Buck, Shoulders said.

However, responding to Buck’s motion, Josh J. Minkler, U.S. attorney for the Southern District of Indiana, said May 27 that the request should be denied.

“His medical conditions, as described in both prison records and the medical records he filed, do not rise to that level, even in light of” COVID-19, Minkler argued in a response filed with the court. Buck started serving his prison sentence at FCI Terre Haute in Terre Haute, Indiana, on March 21, 2019, Minkler noted.

On July 7, the judge denied Buck’s request, saying in his order: “Mr. Buck has not shown that extraordinary and compelling reasons warrant a sentence reduction.”

“Although Mr. Buck’s physician, Dr. James Rea, wrote a letter in which he opined that Mr. Buck’s age and ‘chronic history of asthma with some pulmonary issues,’ including suspected bronchitis, ‘place him at greater risk for pulmonary complications if he were to contract COVID19,’ …  Buck has not reported any issues with his asthma during his incarceration,” Sweeney wrote in his decision.

For one thing, Buck was “not using an inhaler,” the judge noted. Buck’s physical exam also “showed nothing remarkable about his respiratory system… and he has no work restrictions,” Sweeney said.

Although Buck also cited “selective Immunoglobulin M deficiency, an immune system disorder, as a risk factor,” the ex-broker “has not established that he still suffers from this deficiency such that it would compromise his immune system if he were to contract COVID-19,” the judge ruled.

In addition, although “eight out of ten COVID-19-related deaths have been in adults 65 years and older,” the judge said, “Buck has been in good health while incarcerated” and his “age is not enough where he does not suffer from other known risk factors.”

Buck previously agreed to pay more than $5 million to settle charges with the Securities and Exchange Commission that he schemed to increase his personal income by overcharging investors.

According to the SEC’s complaint, Buck represented to certain customers with commission-based accounts that the total annual commissions they paid would not exceed certain limits, and then he traded in those accounts and generated commissions that exceeded the amounts he promised. He also intentionally failed to inform the Merrill customers that a fee-based option could be cheaper compared to the total annual commissions being paid based on trades executed in an account, according to the SEC.

As part of the SEC settlement, Buck agreed to pay disgorgement of $2.56 million in ill-gotten gains plus interest of $297,000 and a penalty of $2.23 million.

The SEC barred Buck from acting as a broker or investment advisor or otherwise associating with firms that sell securities or provide investment advice to the public.

The Financial Industry Regulatory Authority also barred Buck from acting as a broker or otherwise associating with a broker-dealer firm, according to FINRA’s BrokerCheck website.


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