September 3, 2021
Continuing its crackdown on brokers who may have improperly sought pandemic aid financial loans, the Money Business Regulatory Authority has barred a 19-year ex-Merrill Lynch broker who declined to cooperate with an investigation into his pursuit of a mortgage intended for modest organizations.
Scott G. Madison, who had labored out of Beverly Hills and New York City, agreed to the bar without admitting or denying wrongdoing alternatively than participate in the regulator’s investigation. He and his attorney, Gregg Breitbart in Fort Lauderdale, Florida, did not return requests for comment about his determination.
The settlement, which was finalized August 30, stuck out as Madison experienced been a relatively effective broker with $1.1 million in profits and $150 million in assets when Merrill employed him from Stifel Money in 2017.
George Miller, a lawyer at Shustak Reynolds & Companions, who was not included in the situation, claimed that Madison may perhaps have “seen the creating on the wall” in choosing to settle but also famous that brokers threat additional exposure or most likely criminal liability if more details surface for the duration of hearings.
“Potentially there could be other authorized motives not to develop documents to Finra, dependent on the character of the alleged carry out,” Miller stated. “It’s not inconceivable that there could even be legal ramifications.”
Finra, as in a quantity of other enforcement steps above pandemic aid loans this year, located Madison violated its ‘catch all’ Rule 2010, which involves reps to “observe significant requirements,” and bars “any unethical organization-connected misconduct, regardless of whether or not it consists of a protection,” in accordance to the Finra letter. He also violated its Rule 8210 about cooperating in furnishing details and testimony, the regulator claimed.
Finra started investigating right after Merrill filed a U5 termination discover, which explained it experienced discharged him for allegedly refusing to cooperate with its individual probe of no matter if he had wrongly applied for and acquired an Economic Injuries Disaster Bank loan, in accordance to the settlement letter.
Madison entered the sector in 2001, serving one particular- to 4-12 months stints at Jefferies, Goldman Sachs, Credit Suisse and Barclays Cash in advance of joining Stifel in 2015 by way of the firm’s acquisition of Barclays’ U.S. wealth management enterprise, in accordance to BrokerCheck.
His only outside the house business enterprise stated is a trustee of a non-family members belief, the databases displays.
In other scenarios this calendar year, Finra in July fined and suspended a previous Merrill registered rep who was discharged after the agency concluded that she had improperly acquired money for a non-existent true estate assets administration small business by means of the EIDL program. The regulator that month also fined and suspended a former Wells Fargo Advisors broker who allegedly sought to borrow through the very same application to fund his on the internet buying and selling account.
These circumstances were being brought individually from a overview Finra is conducting of brokers who may possibly have taken pandemic financial loans for undisclosed outside firms.
Brokers and registered reps aren’t the only ones in the highlight in excess of alleged abuses of pandemic relief programs.
Registered investment decision advisory firms also may have gouged the Paycheck Defense Plan, a federal method offering forgivable financial loans to small firms impacted by the pandemic, for additional than $36 million, in accordance to an August-released review authored by William Beggs of the College of San Diego and Thuong Harvison of the College of Arizona.
The analyze, titled “Fraud and Abuse in the Paycheck Security Method? Proof from Financial commitment Advisory Corporations,” believed that extra than 6% of $590 million in PPP resources been given by firms in the investment decision management marketplace consisted of “statutory overallocations to corporations abusing the Software.”
Nearly 3,000 RIAs–representing just about a quarter of the RIAs suitable for PPP funds–had gained financial loans in just the initial spherical of the system in the spring of 2020, according to the examine.