September 3, 2021
Persevering with its crackdown on brokers who could have improperly sought pandemic aid loans, the Monetary Trade Regulatory Authority has barred a 19-year ex-Merrill Lynch dealer who declined to cooperate with an investigation into his pursuit of a mortgage meant for small companies.
Scott G. Madison, who had labored out of Beverly Hills and New York Metropolis, agreed to the bar with out admitting or denying wrongdoing quite than take part within the regulator’s investigation. He and his lawyer, Gregg Breitbart in Fort Lauderdale, Florida, didn’t return requests for remark about his choice.
The settlement, which was finalized August 30, caught out as Madison had been a comparatively profitable dealer with $1.1 million in income and $150 million in belongings when Merrill employed him from Stifel Monetary in 2017.
George Miller, a lawyer at Shustak Reynolds & Companions, who was not concerned within the case, mentioned that Madison could have “seen the writing on the wall” in deciding to settle but additionally famous that brokers threat further publicity or probably felony legal responsibility if further info floor throughout hearings.
“Doubtlessly there could possibly be different authorized causes to not produce paperwork to Finra, relying on the character of the alleged conduct,” Miller mentioned. “It’s not inconceivable that there may even be felony ramifications.”
Finra, as in quite a lot of different enforcement actions over pandemic aid loans this yr, discovered Madison violated its ‘catch all’ Rule 2010, which requires representatives to “observe excessive requirements,” and bars “any unethical business-related misconduct, no matter whether or not it entails a safety,” in response to the Finra letter. He additionally violated its Rule 8210 about cooperating in offering data and testimony, the regulator mentioned.
Finra started investigating after Merrill filed a U5 termination discover, which mentioned it had discharged him for allegedly refusing to cooperate with its personal probe of whether or not he had wrongly utilized for and acquired an Financial Damage Catastrophe Mortgage, in response to the settlement letter.
Madison entered the trade in 2001, serving one- to four-year stints at Jefferies, Goldman Sachs, Credit score Suisse and Barclays Capital earlier than becoming a member of Stifel in 2015 by the use of the agency’s acquisition of Barclays’ U.S. wealth administration enterprise, in response to BrokerCheck.
His solely outdoors enterprise listed is a trustee of a non-family belief, the database exhibits.
In different instances this yr, Finra in July fined and suspended a former Merrill registered rep who was discharged after the agency concluded that she had improperly obtained funds for a non-existent actual property property administration enterprise by way of the EIDL program. The regulator that month additionally fined and suspended a former Wells Fargo Advisors dealer who allegedly sought to borrow by way of the identical program to fund his on-line buying and selling account.
These instances have been introduced individually from a assessment Finra is conducting of brokers who could have taken pandemic loans for undisclosed outdoors companies.
Brokers and registered reps aren’t the one ones within the highlight over alleged abuses of pandemic aid applications.
Registered funding advisory corporations additionally could have gouged the Paycheck Safety Program, a federal program offering forgivable loans to small companies affected by the pandemic, for greater than $36 million, in response to an August-released research authored by William Beggs of the College of San Diego and Thuong Harvison of the College of Arizona.
The research, titled “Fraud and Abuse within the Paycheck Safety Program? Proof from Funding Advisory Corporations,” estimated that greater than 6% of $590 million in PPP funds acquired by corporations within the funding administration trade consisted of “statutory overallocations to corporations abusing the Program.”
Practically 3,000 RIAs–representing almost 1 / 4 of the RIAs eligible for PPP funds–had acquired loans in simply the primary spherical of this system within the spring of 2020, in response to the research.