The Financial Industry Regulatory Authority fined a former Merrill Lynch rep $5,000 for improperly removing nonpublic personal client information from the firm without Merrill Lynch’s or the clients’ knowledge or consent, right before he left the firm to work for Raymond James, according to FINRA.
Without admitting or denying the findings, Michael R. Jeppson signed a letter of acceptance, waiver and consent on Aug. 28 in which he agreed to the fine and to be suspended from associating with any FINRA member firm in any capacity for 15 business days. FINRA accepted the letter Monday.
However, Jeppson is no longer associated with any FINRA member and is no longer registered as a broker, although he is still registered as an RIA, according to his report on FINRA’s BrokerCheck website.
Merrill Lynch, Raymond James and Beverly Hills, California lawyer David Harrison, who represented Jeppson in the dispute with FINRA, did not immediately respond to requests for comment Thursday.
Jeppson worked for Merrill Lynch from 1985-1991 and again from 2008-2017, leaving to join Raymond James in 2017 and remaining there until 2019, according to BrokerCheck. The reason he left Raymond James was not cited.
In January and February 2017, Jeppson sent 161 unencrypted emails from his Merrill Lynch email account to his personal email account containing his customers’ nonpublic personal information that he received from the firm as part of his employment with it as a registered representative, according to FINRA.
Jeppson retained that client information after the termination of his association with Merrill Lynch, during which time he was not entitled to possess the information, according to FINRA.
All 161 emails contained information protected by Regulation S-P and, of them, 146 emails attached Quarterly Performance Reports that stated “SENSITIVE CLIENT INFORMATION INSIDE” on the cover page and included detailed financial information for each customer, such as total performance summary, asset allocation, account list (with partial account numbers) and relative performance, according to FINRA.
Fifteen emails included other information protected by Regulation S-P, including account value, rate of return and asset allocation, FINRA said.
As a result of his conduct, Jeppson caused Merrill Lynch to violate Regulation S-P, and in so doing, violated FINRA Rule 2010 (governing standards of commercial honor and principles of trade), FINRA alleged.
Another Ex-Merrill Rep Sanctioned
Separately, FINRA fined another former Merrill Lynch rep $5,000 for violating FINRA Rule 2010.
In that case, the ex-rep allegedly deposited six checks, totaling $3,250, issued from his closed financial accounts into two of his personal bank accounts, according to FINRA.
The broker “knew or should have known that the accounts did not have funds to cover the checks and withdrew funds from his personal bank accounts before the checks were returned for insufficient funds,” FINRA alleged.
Merrill Lynch filed a Form U5 Oct. 31, 2018, disclosing that it discharged Joshua K. Staudinger. In a disclosure on Staudinger’s BrokerCheck report, Merrill alleged his conduct was “inconsistent” with its standards and involved “depositing worthless items into his personal checking accounts which resulted in [the] associate receiving funds that did not belong to him.”
Without admitting or denying the findings, Staudinger signed a letter of acceptance, waiver and consent Sept. 15 in which he agreed to the fine and to be suspended from associating with any FINRA member firm in any capacity for three months. FINRA accepted that letter Friday.
However, Staudinger is no longer registered as a broker or RIA, according to his BrokerCheck report.
Merrill Lynch and James J. Eccleston, the lawyer who represented Staudinger in his dispute with FINRA, didn’t immediately respond to requests for comment.