What You Need to Know
- The ex-broker allegedly defrauded at least 100 mostly clients, mostly older adults.
- He was previously terminated by Raymond James and then voluntarily resigned from Alliance Global Partners while he was under investigation.
- FINRA barred him from the industry after he refused to cooperate with its investigation into his actions.
A former broker who was barred from the industry by the Financial Industry Regulatory Authority and was the subject of 37 client disputes has now been charged by the Securities and Exchange Commission with defrauding at least 100 advisory clients.
The 37 disputes were all included in disclosures on Michael F. Shillin’s report on FINRA’s BrokerCheck website in 2020 (six of them) or 2021 (the remaining 31), after he was terminated by Raymond James Financial Services on May 21, 2018, and voluntarily resigned from Alliance Global Partners on Oct. 2, 2020, while under investigation for alleged securities violations. Four were closed without action.
In the disputes, most of which are still pending, Shillin is accused of making a diverse array of misrepresentations to clients, including:
- Misrepresenting that he bought securities in claimants’ accounts when he didn’t and presenting claimants with documents that led them to believe the securities had been bought.
- Telling clients he bought shares of SpaceX stock with their funds when he did not.
- Saying he would switch a client’s (and separately the client’s wife’s) life insurance policy from State Farm to John Hancock. The wife’s policy was switched, but the documentation the client received regarding his policy switch appeared to be falsified and JH indicated the client had no policy with it, according to BrokerCheck.
- Providing clients with falsified 1099 forms for 2019, causing the clients to complete an inaccurate tax return. Clients also said they took more money out of an IRA in 2019 than they otherwise would have based on Shillin’s advice and misrepresentation that the interest on the bonds that they held in their individual accounts was tax-free.
- Making misrepresentations and providing bad advice in connection with the viability of a life insurance policy purchased in 1988, and the resolution of a claim by one of the beneficiaries of that policy.
- Failing to inform claimants that there were limits on penalty-free withdrawals from 401(k) accounts that had been rolled into an IRA and incorrectly representing to claimants they could withdraw from their IRAs when the withdrawals were prohibited transactions.
FINRA barred Shillin in December after he refused to produce information or documents or give on-the-record testimony as requested by FINRA staff — a surefire way to be barred by the industry self-regulator.
Without admitting or denying FINRA’s findings, Shillin signed a FINRA letter of acceptance, waiver and consent on Dec. 14, agreeing to be barred from being associated with any FINRA member firm in all capacities. FINRA signed the letter Dec. 18.
In the SEC complaint, filed Thursday in U.S. District Court, Western District of Wisconsin, the SEC alleged that Shillin, 32, of Appleton, Wisconsin, fabricated documents and made misrepresentations to clients, many of whom were seniors, while acting as an investment advisor.
Raymond James declined to comment on Monday. AGP did not immediately respond to a request for comment.
Shillin misrepresented that certain clients had successfully subscribed for initial public offering or pre-IPO shares in high-profile companies when they had not, and lied to clients about the actual value of their investment portfolios, according to the SEC.