David Jonathan Merriman of San Francisco California a former chief executive officer of Merriman Capital Inc. is referenced in a customer initiated investment related arbitration claim where the customer sought $60,000.00 in damages based upon accusations of poor performance pertaining to over-the-counter equities. Financial Industry Regulatory Authority (FINRA) Arbitration No. 17-00954 (Dec. 8, 2017).
FINRA Public Disclosure reveals that Merriman has been identified in three additional customer initiated investment related disputes containing allegations of his sales practice violations while employed with Merriman Capital.
Specifically, a customer initiated investment related arbitration claim regarding Merriman’s activities was settled for $43,000.00 in damages supported by accusations that Merriman, as chief executive officer, induced the customer to hold penny stock investments in the customer’s account; executed trades in the customer’s account without the customer’s authorization; breached a fiduciary duty to the customer; negligently supervised the customer’s account; misrepresented the terms and conditions of investing; breached contractual obligations; violated Section 25.400 of California Corporations Code; and defrauded the customer. FINRA Arbitration No. 09-00438 (Mar. 12, 2010).
Subsequently, a customer initiated investment related civil action involving Merriman’s conduct was resolved for $90,000.00 in damages founded on allegations that customers were persuaded to buy shares of a speculative entity that Merriman had also invested in; and then refused to allow the customers to sell positions in those securities when the price of the equities had declined. Civil Action No. CGC-10-495904 (Oct. 10, 2013). Then, a customer initiated investment related arbitration claim involving Merriman’s activities was settled for $300,000.00 in damages based upon accusations of unauthorized trading of stock and over-the-counter equities in the customer’s account.
Moreover, Merriman has been subject of a Securities and Exchange Commission (SEC) Cease-And-Desist Order and Order Instituting Administrative Proceedings, Making Findings, and Imposing Remedial Sanctions containing findings that Merriman failed to properly delegate supervisory responsibilities over David Scott Cacchione – a Merriman stockbroker who committed securities fraud. Case No. 3-13681 (Nov. 10, 2009).
According to the Order, Cacchione engaged in two fraudulent schemes. In the first one, the firm’s e-mail system was utilized by Cacchione to transfer customers’ private accounts documentation to William Del Biaggio III in order for Merriman to pledge those securities to procure personal loans totaling $45,000,000.00. In the other scheme, Cacchione reportedly traded in customer accounts on a fraudulent basis, placing speculative securities purchases in their accounts without their authorization.
The SEC Order stated that Cacchione had initially been placed on heightened supervision by the firm because of Cacchione’s past misconduct in the securities industry. Yet, the supervisory responsibility was delegated to a compliance person who failed to perform his supervisory functions. Moreover, Merriman reportedly neglected to ensure that Cacchione was reasonably supervised by the firm despite a senior customer having complained about Cacchione effecting purchases of penny stocks in the customer’s account without obtaining the customer’s permission. As part of resolving the SEC’s allegations, Merriman consented to cease and desist committing violations of Securities Exchange Act of 1934 Section 15(b)(7). He was also ordered to pay a $75,000.00 penalty, and received a twelve month suspension from associating with any broker-dealer in a supervisory role.
Merriman Capital Inc. was expelled by FINRA on January 3, 2017, supported by accusations that it failed to fulfill its obligation to pay a fine to FINRA relating to Letter of Acceptance, Waiver and Consent No. 2011029223601. Merriman has been associated with B. Riley FBR, Inc. since July 14, 2017.
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