Robert Spencer Gerstein of New York, New York, a stockbroker registered with Merrill Lynch Pierce Fenner Smith Inc., has been fined $5,000.00 and suspended for six months by FINRA because Gerstein engaged in the unsuitable short term trading of mutual funds during the time that he was associated with Merrill Lynch. Letter of Acceptance, Waiver, and Consent No. 2019061789202 (July 20, 2023).
According to the AWC, Gerstein recommended buying and selling Class A mutual fund shares within a short period. These shares are known for front-end loads and are typically meant to be held over a long period to make up for those fees. Despite this, FINRA stated that Gerstein effected 234 short-term trades in Class A mutual fund shares in four different customer accounts. On average, these shares were held for just 198 days.
The AWC also indicated that the stockbroker suggested short-term trading of other products like market-linked investments (MLIs) and unit investment trusts (UITs), which FINRA considered as long-term holdings. He advised his customers to buy these products and sell them before they reached maturity. Some of these were sold within twelve months, some within six months, and some even within three months.
FINRA stated that Gerstein earned a total of $129,496 from these transactions, but he didn’t have an adequate basis to conclude that those transactions were suitable for customers. As a result, he violated FINRA Rules 2010 and 211.
In addition, Gerstein also falsely marked 150 transactions as unsolicited. The regulator stated that he was actually the one who suggested them. Therefore, he violated FINRA Rules 2010 and 4511.
Gerstein is referenced in a customer initiated investment related complaint filed on October 8, 2002, in which the customer requested compensation based upon allegations that Gerstein engaged in unauthorized trading in mutual funds. This complaint was closed without a resolution.
Gerstein is additionally referenced in a customer initiated investment related complaint that was settled on April 16, 2014, for $8,889.00 in damages based upon allegations that Gerstein made unsuitable recommendations of mutual funds when Gerstein was registered with Merrill Lynch Pierce Fenner Smith Inc.
On April 17, 2019, another customer initiated investment related complaint involving Gerstein’s conduct was settled to resolve allegations that Gerstein made misrepresentations and unsuitable recommendations in connection with the sale of investments.
Gerstein was registered with Merrill Lynch Pierce Fenner Smith Inc. as a stockbroker from July 26, 1977, to March 1, 2022.
