Landon Lavon Williams, of Jacksonville, Florida, a stockbroker formerly registered with Merrill Lynch, Pierce, Fenner & Smith Incorporated, has been fined $10,000.00 and suspended for two years from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity according to a FINRA Office of Hearing Officers Order Accepting Offer of Settlement containing findings that Williams made substantial omissions and misrepresentations to customers and the firm in reference to securities sales, and caused Merrill Lynch’s records and books to contain inaccuracies. Department of Enforcement v. Landon Lavon Williams, No. 2014042524301 (Oct. 23, 2017).
According to the Order, from March 5, 2014, to July 23, 2014, five customers – RBS, JLM, GDC, RLC, and ASA – corresponded with Williams regarding investment transactions while Williams was a financial solutions advisor with Merrill Lynch, where the customers were exposed to Williams’ misleading and false statements and omissions regarding the securities recommended by Williams.
The Order stated that customer ASA held an individual retirement account with Merrill Lynch since May of 2007. Apparently, on March 5, 2014, Williams discussed ASA’s retirement account, and made recommendations at that time for Williams to sell her class C shares of Blackrock Core Bond Fund (BCBCX) as well as Blackrock Global Allocation Fund (MCLOX) to buy class A shares of Blackrock Funds Diversified Portfolios IV Growth – a brokerage based service that would cost the customer more than four percent in sales charges.
While speaking with ASA regarding the investments, Williams reportedly stated that the customer would be saving on annual operating expenses by moving from class C shares of BCBCX and MCLOX to class A shares based on the A shares having 0.87 percent in annual operating fees. However, the Order stated that the A shares Williams spoke of carried 1.10 percent in annual operating fees, and ASA would not be moving to the A shares Williams referenced; but rather; a completely different investment.
Williams also purportedly stated that the A shares would benefit ASA overtop of saving on annual operating expenses by providing one percent greater returns than ASA’s existing C shares; however, FINRA noted that the higher return Williams referenced was based on the lower costs – not in addition to the lower costs. Williams evidently told ASA that her breakeven point in making the switch was three years, yet Williams actually noted that it was seven years in Merrill Lynch’s Team Track database. Williams also incorrectly stated ASA’s investment horizon as ten or more years within Team Track, where ASA told Williams that she planned on withdrawing funds in as early as one year.
The Order further stated that Williams told customer RLC in June 11, 2014, that Franklin Strategic Income Fund Class C (FSGCX) was a very conservative, investment-grade fund; however, those representations were not true: FSGCX was neither a conservative fund nor investment-grade. Williams stated in the firm’s Team Track database that RLC was cognizant that the fund could be allocated in sub-investment grade debt, but RLC was never apprised of this information. Williams purportedly stated that RLC represented to him that RLC had savings equaling more than six months of RLC’s expenses, when RLC never made any representation in that respect.
The Order revealed that Williams made false representations to GDC within a July 8, 2014 conversation about investing, where he falsely represented having discussed the exchange of GDC’s assets with a PIMCO mutual fund, falsely stated that GDC knew about investing in sub-grade investment risk, and lied about GDC having been comfortable with investing in sub-investment grade debt products.
On July 9, 2014, Williams reportedly spoke with customer JLM, where he made false statements about annual expenses of class C shares of Franklin Strategic Income Fund, lied about discussing an exchange of JLM’s assets into a PIMCO mutual fund, and falsely stated JLM’s comfort level with the risk of sub-investment grade products.
In reference to customer RBS, the Order stated that Williams claimed to have disclosed fees in the purchase of FSGCX when he never made those disclosures. Williams apparently stated that he discussed class A shares with the lowest expenses and that RBS was a moderate-to-conservative investor comfortable with sub-investment grade debt. However, RBS never made those representations, and the customer’s investment horizon was not more than ten years as Williams suggested.
FINRA found that the myriad of omissions and misrepresentations that Williams made, as well as his misleading statements regarding the recommended securities transactions, was conduct violative of FINRA Rule 2010. FINRA also concluded that Williams’ inaccurate entries in the firm’s Team Track database pertaining to customer accounts was violative of FINRA Rules 2010 and 4511. Finally, FINRA deemed Williams’ false representations to his firm’s compliance personnel as conduct violative of FINRA Rule 2010.
Williams was fired by Merrill Lynch on August 6, 2014, based upon allegations of Williams’ failure to disclose information in reference to mutual fund trades entered in customer accounts, and for his inaccurate internal entries pertaining to customer interactions.
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