What You Need to Know
- FINRA has suspended the Merrill Lynch rep and supervisor for three months and fined him $5,000.
- FINRA has imposed the same sanctions on a former Merrill rep over early UIT rollovers also.
- Merrill was ordered to pay more than $11 million over early UIT rollovers and failure to properly supervise its reps.
The Financial Industry Regulatory Authority suspended and fined a Merrill Lynch rep for his role in early rollovers of unit investment trusts (UITs).
On Friday, FINRA ordered Merrill to pay more than $8.4 million in restitution to more than 3,000 clients who incurred potentially excessive sales charges related to early UIT rollovers and fined the firm $3.25 million for failing to reasonably supervise such transactions.
Kelly Wayne Feehrer has been registered as a rep with Merrill since October 1990 and as a supervisor since September 1995. He signed a FINRA letter of acceptance, waiver and consent on June 14 in which he agreed to the imposition of a three-month suspension and $5,000 fine.
Meanwhile, a former Merrill rep, Scott R. Mathews, signed a FINRA AWC letter on June 21 in which he agreed to the imposition of the same suspension and fine as Feehrer over early UIT rollovers. Mathews was registered as a rep with Merrill from October 2009 through December 2020, when the firm filed a Form 5 Uniform Termination Notice disclosing that the broker voluntarily resigned.
What Your Peers Are Reading
FINRA signed each of the letters Friday.
Merrill on Monday declined to comment on the allegations against Feehrer and Mathews or say if there were other reps at the firm who were involved in the UIT rollovers during the same period. An attorney who represented Mathews and Feehrer did not immediately respond to a request for comment.
Between Jan. 1, 2011 and Dec. 31, 2015, Feehrer engaged in an unsuitable pattern of short-term trading of UITs in client accounts, FINRA alleged. During the period, Feehrer recommended that more than 200 of his clients roll over UITs more than 100 days prior to their maturity on almost 3,000 occasions, FINRA said.