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Regulation and Compliance > Federal Regulation > FINRA

Ex-Merrill Broker Says He's Relieved After Do-Not-Call Allegation Expunged

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What You Need to Know

  • Merrill Lynch had alleged an ex-broker violated its Do Not Call list policy before he left for rival Morgan Stanley.
  • An arbitrator for FINRA called Merrill's allegation defamatory and false in a recent decision.
  • Merrill declined to comment on the decision Tuesday.

A former Merrill Lynch broker whom the firm had accused of violating its Do Not Call list policy told ThinkAdvisor on Tuesday he was relieved the allegation was removed from his record after a public arbitrator for the Financial Industry Regulatory Authority called the claim “defamatory” and “false” in a recent decision.

Merrill’s allegation was “something that, as we claimed, was defamatory in nature to a young advisor, something that could result in unnecessary conversations with existing clients and prospective clients,” Lawrence Casey Ennis said in a phone interview.

Ennis has been a FINRA-registered rep for seven years, starting with J.P. Morgan Securities from 2013-2016, according to his report on FINRA’s BrokerCheck website. He joined Merrill Lynch Wealth Management in July 2016 and left in November 2020 to join rival Morgan Stanley that same month. He has been registered as a broker and advisor for both his last two firms.

He was “very aware” of the firm’s Do Not Call policy, did not violate it, and did not even know that Merrill was investigating him for the violation when he left the wirehouse last year, he said. The allegation and investigation “had absolutely nothing to do” with him leaving Merrill, he added.

“Their counsel told mine that if I had been at the firm when the investigation was concluded, my record would be clean so, to me, it seemed like something was off and that’s why we proceeded with the expungement case,” he explained. He was never told what the findings of Merrill’s investigation were before a disclosure was added to his record, he said.

Fighting against the allegation “took a lot of time and money but it was well worth it for a long career [with] a clean record,” he added.

The fact that the arbitrator ruled against his request for $1 in compensatory damages but Merrill was “liable for and shall reimburse Claimant $25.00 for the non-refundable portion of Claimant’s filing fee” was of little significance to Ennis, he said.

“The point was that it was defamatory and we just wanted to focus on that concept and less about the dollars and cents,” he explained.

Explaining his Nov. 16 decision, Steven Gary Leventhal, sole public arbitrator, said: “The information for which expungement is sought has no meaningful regulatory or investor protection value. The statements set forth in the amended Form U5 are false.”

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What’s more, “no evidence of a specific allegation against the Claimant was presented at the hearing,” Leventhal added. “The statements are of a nature that would tend to injure the Claimant in his business, trade or profession, and are defamatory. Accordingly, it is hereby directed that FINRA expunge the disclosure.”

Merrill declined to comment on the arbitrator’s decision Tuesday.

The firm terminated brokers for allegedly violating its Do Not Call list policy in the past. For example, Nicholas John Ferguson was terminated Dec. 15, 2020 and was with Merrill in New York since September 2017, which marked the start of his career in the industry, according to BrokerCheck.

Ethan Kunin was terminated by Merrill on Dec. 18 and was with the firm in Austin, Texas since September 2018, according to BrokerCheck.

Last year, Merrill put a short-term halt to cold calling by advisor trainees in response to outreach-related violations, according to Business Insider, which obtained a copy of an internal memo written by Jennifer MacPhee, who later retired from her role as head of Merrill’s training program for more than 3,000 financial advisors.

In September 2020, Merrill said it intended to resume such outbound calling activity in the “not too distant future as the new team and its approach settle in.”

However, the company more recently indicated it was looking to be less reliant on the use of cold calling.

(Pictured: A Merrill Lynch branch office; Image: Shutterstock)