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SEC Bans Former Merrill Lynch Broker For Stealing From Clients

On November 5, 2013, the Securities and Exchange Commission (“SEC”) banned former Merrill Lynch broker, James R. Lanier, from the securities industry for stealing his clients’ funds. Lanier was registered with Merrill Lynch between August 2007 and March 2010 in Tallahassee, Florida. According to federal prosecutors, Lanier misappropriated $887,931 from investment advisory and/or brokerage accounts of Merrill Lynch clients and customers between September 2008 and March 2010. Lanier forged letters purportedly authorizing the transfer of customer and/or client funds to bank accounts he controlled. Among other things, Lanier used approximately $1 million in client funds not only to invest in a cellular telecommunications business, but also to purchase a condominium and a pickup truck. To conceal his fraud, Lanier transferred a portion of the misappropriated funds to bank accounts of customers and/or clients who requested liquidation of their Merrill Lynch accounts. In March 2013, Lanier was convicted of wire fraud, mail fraud, money laundering, and aggravated identify theft. United States v. Lanier, No. 4:12-cr-51 (N.D. Fla. Mar. 8, 2013). He was sentenced to 106 months of incarceration and a five-year term of post-release supervision, and was ordered to pay $887,931 in restitution.

On September 23, 2013, the SEC instituted an Order Instituting Proceedings (OIP) pursuant to Sections 15(b) of the Securities Exchange Act of 1934 (Exchange Act) and 203(f) of the Investment Advisers Act of 1940 (Advisers Act) alleging that Lanier was convicted of wire fraud, mail fraud, money laundering, and aggravated identity theft. Lanier failed to answer or otherwise to defend the proceeding. In her Decision, SEC Administrative Law Judge Carol Fox Foelak stated, “Lanier’s unlawful conduct was recurring and egregious…extending over a period of several years, it involved hundreds of thousands of dollars,” and barred him from the industry.

A spokesman for Bank of America Corp., which owns Merrill Lynch, said the company has reimbursed the victims and that the bank is owed the restitution amount from Lanier.

Lax & Neville LLP has nationally represented small broker-dealers, financial services professionals and securities industry companies in regulatory matters and securities-related and commercial litigation. Additionally, Lax & Neville has extensive experience in successfully prosecuting claims on behalf of customers who have suffered losses, including losses in variable universal life insurance products. Lax & Neville also has extensive experience in successfully prosecuting claims against Merrill Lynch. Please contact our team of attorneys for a consultation at (212) 696-1999.