September 3, 2021
Continuing its crackdown on brokers who may have inappropriately requested loans to help in the pandemic, the Financial Industry Regulatory Authority has barred 19-year-old former broker Merrill Lynch, who refused to cooperate with the investigation into his pursuit of a small business loan.
Scott G. Madison, who has worked in Beverly Hills and New York, agreed to the bar without admitting or denying wrongdoing, rather than being involved in a regulatory investigation. He and his lawyer Gregg Breitbart of Fort Lauderdale, Florida, did not respond to requests for comment on his decision.
The settlement, which was finalized on August 30, stalled as Madison was a relatively successful broker with $ 1.1 million in revenue and $ 150 million in assets when Merrill hired him from Stifel Financial in 2017…
George Miller, a lawyer for Shustak Reynolds & Partners who was not involved in the case, said Madison may have “seen the writing on the wall” in deciding the settlement, but also noted that brokers risk further exposure or potentially criminal liability in In the event, additional facts emerge during the hearing.
“There could be potential other legal reasons for not submitting documents to Finra, depending on the nature of the intended behavior,” Miller said. “It is possible that there may even be criminal ramifications.”
Finra, as with a number of other pandemic relief loan law enforcement measures this year, found Madison violated her 2010 “universal rule” which requires representatives to “maintain high standards” and prohibit “any unethical misconduct. related to the business, regardless of whether it is related to the security, ”- said in a letter to Finra. He also violated his Rule 8210 on cooperation in the provision of information and testimony, the regulator said.
Finra launched an investigation after Merrill filed a dismissal notice to U5, which said she fired him for allegedly refusing to cooperate with his own investigation into whether he mistakenly applied for and received a disaster loan for economic damage, according to settlement letter.
Madison entered the industry in 2001 after spending one to four years at Jefferies, Goldman Sachs, Credit Suisse and Barclays Capital, before joining Stifel in 2015 through Barclays’ acquisition of a U.S. asset management business, according to BrokerCheck.
The database shows that his only outside business on the list is the trustee of a non-family trust.
Otherwise this year Finra in July fined and suspended from office of former registered representative of Merrill which was fired after the firm concluded that it had improperly received funds for a defunct property management business through the EIDL program. Regulator this month also Former Wells Fargo Advisors Broker Fined & Suspended who allegedly tried to get a loan through the same program to fund his online trading account.
These cases were initiated separately from review by Finra brokers who may have taken out loans in connection with the pandemic for undisclosed external businesses.
Brokers and registrants are not the only ones at the center of the alleged abuse of pandemic relief programs.
Registered investment advisory firms could also have defrauded the Payroll Protection Program, a federal program that provides forgivable loans to small businesses affected by the pandemic, worth more than $ 36 million, according to a study published in August by William Beggs of the University of San Diego. and Tuong Harvison of the University of Arizona.
V studytitled “Fraud and abuse in the pay protection program?” Evidence from Investment Advisory Firms, “an estimated 6% of the $ 590 million in PPP funds received by investment management firms consisted of” statutory resource overshoots for firms abusing the Program. “
According to the study, about 3,000 RIAs, representing nearly a quarter of RIAs eligible for PPP funds, received loans in the first round of the program in the spring of 2020 alone.