Kenneth Daley, of Garden City, New York, a stockbroker with Merrill Lynch, Pierce, Fenner & Smith Incorporated, was permanently barred from associating with any Financial Industry Regulatory Authority (FINRA) member firm in any capacity after consenting to findings that he concealed customer funds and made an unsuitable investment recommendation. Letter of Acceptance, Waiver and Consent, No. 2016050129701 (June 27, 2016).
According to the AWC, from 2007 through 2012, Daley was the point of contact for an inexperienced investor, ER. During this time, ER spoke with Daley about providing Daley with a portion of the profits pertaining to ER’s investments, which Daley knew his firm disallowed. Notwithstanding Daley’s knowledge in this regard, Daley apparently provided ER with his banking information at an unrelated financial institution, and instructed ER to provide him with direct deposits in such accounts.
The AWC stated that from July 2014 through November 2014, ER made nine payments to Daley, totaling $29,000.00 pursuant to ER’s alleged profits. Daley reportedly utilized ER’s funds for his personal expenses. FINRA found that Daley knew that he was prohibited from sharing in customer profits, and found his conduct to be violative of FINRA Rules 2010 and 2150.
The AWC further stated that in January 14, 2015, Daley made unsuitable recommendations to ER by recommending that she purchase non-traditional leveraged exchange traded funds in crude oil even though he had no legitimate basis to make such recommendations. Apparently, Daley lacked non-traditional exchange traded fund trainings, and did not properly assess the risk factors associated with holding non-traditional exchange traded funds for longer than one trading day. The AWC stated that Daley did not comprehend that longer holding periods associated with non-traditional exchange traded funds could result in customers bearing substantial losses.
According to the AWC, on January 14, 2015, pursuant to Daley’s aforementioned recommendation to ER, she purchased five thousand units worth $41,850.00. ER reportedly did not sell her position until months later, on August 5, 2015, after bearing substantial losses. FINRA found that Daley’s unsuitable recommendation was violative of FINRA Rules 2010 and 2111.
Public disclosure records reveal that prior to FINRA’s barring of Daley, he was terminated by Merrill Lynch amid allegations of improperly receiving customer funds that were written from an outside financial institution.
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