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Regulation and Compliance > Federal Regulation > FINRA

FINRA Fines Ex-Merrill Rep Who Hid Felony Drug Charges

By Jeff Berman

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What You Need to Know

  • Merrill Lynch had terminated a broker who didn't disclose he was arrested on two felony drug charges and then lied about it.
  • The ex-rep was charged with criminal possession of a controlled substance with intent to sell and criminal possession of 10 pounds or more of marijuana.
  • He has been fined $5,000 on a deferred basis and suspended for three months, but he is not currently a registered broker or advisor.

The Financial Industry Regulatory Authority has fined an ex-Merrill Lynch broker $5,000 and suspended him for three months from associating with any FINRA firm in all capacities because he failed to disclose he had been arrested and charged with two felony drug offenses, and also lied about it in two U4 forms, according to FINRA.

Without admitting or denying FINRA’s findings, Shaiful Chowdhury signed a FINRA letter of acceptance, waiver and consent on Sept. 8 in which he consented to the sanctions. FINRA signed the letter Friday.

Since he is no longer registered as a broker or advisor, the suspension will be imposed only if he reassociates with a member firm. Similarly, the fine was deferred and “shall be due and payable either immediately upon reassociation with a member firm or prior to any application or request for relief from any statutory disqualification resulting from this or any other event or proceeding, whichever is earlier,” according to FINRA.

On Monday, Merrill declined to comment on FINRA’s sanctions against its former broker.

In January 2016, Chowdhury became registered with FINRA as a general securities representative, while he was working for J.P. Morgan Securities, according to his report on FINRA’s BrokerCheck website. He had already joined that firm in 2013.

In December 2019, Chowdhury left J.P. Morgan and joined Merrill a month later as a general securities representative. However, on Jan. 20, 2021, Merrill Lynch filed a Form U5 Uniform Termination Notice for Chowdhury, terminating his registration with FINRA.

A disclosure on his report notes he was charged with criminal possession of a controlled substance with intent to sell and criminal possession of marijuana in the first degree (10 pounds). He pleaded not guilty, according to his BrokerCheck report.

On Feb, 25, 2020, Chowdhury was arraigned in Kings County Criminal Court in Brooklyn, New York, and charged with the two felonies under the state’s penal code. Chowdhury completed Form U4 updates only two days after his arraignment and April 28, 2020, but “did not disclose the two felony charges” in either one, according to FINRA. On both Form U4s, he selected “no” when asked if he had ever been charged with a felony, FINRA said.

The felonies were not disclosed until May 5, 2020, after Merrill learned of them when doing a routine background check on Chowdhury, according to FINRA.

“Chowdhury was aware of the felonies and knew that he should have disclosed them on his Form U4 within thirty days of when he learned of the charges,” according to FINRA. “The felony charges were material facts that a reasonable employer or customer would want to know about a representative,” FINRA noted.

“Therefore, Chowdhury willfully failed to timely disclose material facts on his Form U4 in violation of FINRA By-Laws and FINRA Rules 1122 (filing of misleading information as to membership or registration) and 2010 (standards of commercial honor and principles of trade).

Jeff Berman

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