Fred Ronald Brown Jr. of Montgomery Alabama a stockbroker formerly registered with Merrill Lynch Pierce Fenner Smith Inc. has been fined $12,500.00 and suspended for ten months from associating with any FINRA member in any capacity based upon allegations that (1) Brown took possession of customers’ funds through an unapproved customer loan arrangement and (2) Brown lied about borrowing from customers when questioned by Merrill Lynch. Letter of Acceptance Waiver and Consent No. 2017055021201 (June 25, 2019).
According to the AWC, in May of 2016, a total of $55,000.00 had been lent to Brown from WB, whose sons maintained Merrill Lynch corporate customer accounts. Evidently, Brown steered WB and the two sons towards loaning him the funds, which were taken from the sons’ Merrill Lynch account. Additionally, in December of 2016, a total of $14,000.00 had been provided to Brown by an elderly customer, CS, through a loan arrangement.
Evidently, Merrill Lynch was never notified by Brown in regard to the loan transactions, and the firm never permitted Brown to enter into the loan transaction. The AWC revealed that when the loans were made, Brown was prohibited under the firm’s written supervisory procedures from borrowing from customers of the firm. FINRAA found Brown’s conduct in this regard to be violative of FINRA Rules 2010 and 3240.
The AWC additionally stated that Brown failed to be forthcoming to the firm in regard to his borrowing of customer funds. Particularly, Brown was required to complete compliance questionnaires that had been administered to him by the firm in 2016. Evidently, in Brown’s response, he indicated to the firm that he did not borrow any funds from customers or someone whose family members were customers of the firm. Evidently, one of the customers who Brown borrowed money from contacted Merrill Lynch in regard to the loan arrangement, prompting the firm to internally investigate Brown’s activities. The firm concluded from its investigation that Brown lied in the questionnaire. FINRA found Brown’s conduct violative of FINRA Rules 2010.
This is not the first time that Brown has been sanctioned by FINRA. Specifically, Brown was suspended by FINRA in all capacities founded on accusations that Brown failed to comply with the terms of a FINRA Arbitration Award. Case No. 14-01963 (Mar. 8, 2017). Additionally, FINRA Public Disclosure confirms that Brown has been referenced in two customer initiated investment related disputes pertaining to allegations of Brown’s misconduct while he was registered with Merrill Lynch. Particularly, on July 14, 2017, a customer initiated investment related complaint in regards to Brown’s activities was resolved for $14,000.00 in damages supported by accusations of a loan being solicited by Brown which Brown later defaulted on. On January 8, 2018, another customer initiated investment related complaint involving Brown’s conduct was settled for $55,000.00 in damages based upon allegations that the customer’s funds had been misappropriated by Brown, who supposedly solicited a fraudulent loan.
