Harold Joseph Petro, of Indianapolis, Indiana, a stockbroker with Merrill Lynch, was fined $15,000.00 and suspended for six months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity after consenting to findings that he engaged in unauthorized discretionary trading in customer accounts. Letter of Acceptance, Waiver and Consent, No. 2014040640101 (Mar. 7, 2016).
According to the AWC, from December 2013 through January 2014, Petro had engaged in the unauthorized discretionary trading in four of his firm’s customers’ accounts. Petro reportedly acted without approval from his customers in the course of trading Bank of America shares in their accounts.
The AWC indicated that Merrill Lynch’s policies and procedures prohibited stockbrokers from exercising discretion in customer accounts unless customers provided written authorization and the firm approved of such accounts as discretionary prior to trading taking place. Petro reportedly failed to gain such written approval from his clients, and failed to gain firm approval. FINRA found that Petro’s conduct in this regard was violative of FINRA Rule 2010 and NASD Conduct Rule 2510(b) as a result.
The AWC further reported that Petro had solicited such trades in Bank of America stock, where he marked ten trades as unsolicited. The AWC stated that such trades were actually solicited by Petro, as they were not initiated by his customers. FINRA found that Petro caused his firm’s records and books to be inaccurate, in violation of FINRA Rules 4511 and 2010, as a result of mismarking order tickets in this regard.
Public disclosure records reveal that Petro has been subject to four disclosure incidents. On January 1, 2000, a customer alleged that Petro made misrepresentations concerning variable annuity purchases. On October 30, 2008, another customer alleged that Petro engaged in unsuitable investment recommendations and unauthorized trades. On March 6, 2014, Merrill Lynch terminated Petro after finding that he failed to contact clients prior to entering orders in their non-discretionary accounts, while also mismarking orders as unsolicited.
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