Finra says it has suspended and fined a former Merrill Lynch registered representative accused of making unauthorized transactions involving a third-party investment advisor.
While serving as a registered representative in the firm’s self-directed brokerage business in September 2014, Thomas Murphy was allegedly asked by a client to help transfer money from his self-directed IRA to an account with a third-party fund manager in order to make a qualified investment in a private real estate fund outside of her Merrill Lynch account, according to a letter of acceptance, waiver and consent published by the industry’s self-regulator.
Murphy allegedly helped the client and signed the fund’s subscription agreement as an authorized signatory of Merrill Lynch as the custodian of the IRA, Finra says. However, Murphy wasn’t authorized by the company to execute the subscription agreements, according to the letter of acceptance. Moreover, the wirehouse bars its employees from executing documents on its behalf, Finra says.
“Murphy’s conduct created confusion over Merrill Lynch’s role in the investments and whether the transfers from the clients’ IRAs to the private funds would be treated as qualified distributions,” according to the letter of acceptance.
In 2017, while Murphy was a financial advisor in training to join Merrill Lynch’s full-service brokerage, the same third-party manager allegedly approached him to help other clients transfer cash out of their self-directed IRAs at Merrill Lynch to invest in the private real estate funds, Finra says.
Murphy allegedly helped execute 14 subscription agreements between August and November 2017, again as an authorized signatory of Merrill Lynch, according to the letter of acceptance. He allegedly executed seven of those agreements after October 2017, when the wirehouse told him to cease his involvement with the third-party fund manager, Finra says.
The company discharged him in March 2018, according to Finra.
Finra notes that Murphy didn’t receive any compensation from the third-party fund manager for the transactions.
Murphy consented to a four-month suspension and to pay a $5,000 fine without admitting or denying Finra’s findings, according to the letter of consent.
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