Thomas J. Buck, a former high-producing rep for Merrill Lynch who was fired and then kicked out of the securities industry, pleaded guilty Tuesday to overcharging clients by millions of dollars. He also reached a settlement with the SEC for more than $5 million.
In its complaint, the SEC said that from 2012 through March 2015, Mr. Buck, 63, received more than $2.5 million in excessive commissions and fees from at least 50 clients with whom he was working in his Carmel, Ind., practice. He headed what was known as the "Buck Team" with more than 3,000 accounts and $1.3 billion in assets under management.
The SEC said that Mr. Buck put clients into accounts where they paid commissions rather than less expensive fee-based alternatives. He did not tell clients that his commissions exceeded promised limits and placed unauthorized trades in their accounts.
At the time, Merrill told its registered representatives and advisers to compare annual commissions to annual fees and put their clients in the less costly accounts. Typical Indiana-based Merrill advisers received 70% of their revenue from clients in fee-based accounts, while 80% of Mr. Buck's clients were in commission accounts.
Mr. Buck agreed to pay $2.6 million in disgorgement, a $2.2 million penalty and interest of $297,000. He was fired by Merrill Lynch in March 2015 and later that year barred from the brokerage industry by the Financial Industry Regulatory Authority Inc. He now lives in Orchid, Fla.
He also was the subject of an FBI probe, which resulted in one count of securities fraud to which Mr. Buck pleaded guilty. He faces up to 25 years in prison.
"These are not victimless crimes," W. Jay Abbott, special agent in charge of the FBI's Indianapolis Division, said in a statement. "That's why the partnerships the FBI has with agencies such as the Securities and Exchange Commission are important to ensuring a stop is put to unauthorized and illegal activities."