Merrill asks $2.5 billion team to leave

The advisers allegedly violated Finra rules and firm policy by encouraging some of their larger clients to invest directly in hedge funds.
OCT 07, 2014
In a rare move, Bank of America Merrill Lynch last week asked two veteran advisers who managed some $2.5 billion in assets to leave the firm after they allegedly recommended clients make investments outside the firm. The advisers, James Goetz and Stephen Brown, allegedly violated Finra rules and firm policy by encouraging some of their larger clients to invest directly in hedge funds rather than go through the Merrill Lynch's investment platform, according to a source with first-hand knowledge of the situation. Mr. Goetz and Mr. Brown were longtime advisers at the firm and were part of Merrill Lynch's Private Banking and Investment Group, a cadre of around 150 adviser teams who cater to wealthy investors or households who each have around $10 million or more in investible assets. Their firm, The Brown Group, was based in Pittsford, N.Y. Getting rid of a large team belonging to Merrill Lynch's Private Banking and Investment Group is an unusual occurrence. “They rightfully consider themselves some of the most talented and elite advisers in the country,” said Danny Sarch, an industry recruiter at his own firm Leitner Sarch Consultants. “That's why it makes news when it happens.” Even so, selling securities without processing the order through your firm or without the firm's permission of knowledge—commonly called “selling away”—is a violation of firm policy and the rules of the Financial Industry Regulatory Authority Inc. Two assistants who belonged to the Brown Group were also asked to leave, multiple sources confirmed. Those familiar with the matter requested anonymity because of the sensitive nature of the situation. Neither Mr. Brown nor Mr. Goetz responded to requests via LinkedIn for comment. Several personnel who answered the phones at the branch were unable to provide updated contact information. Susan McCabe, a spokeswoman for Bank of America Merrill Lynch, declined to comment. It's unclear whether the matter is being investigated by regulators. A spokeswoman for Finra, Nancy Condon, did not immediately respond to calls requesting comment Thursday night and Friday morning. No change in registration has shown up on the duo's BrokerCheck records. Firms have 30 days to file notice with regulators. Mr. Brown began his career in 1988 at Painewebber Inc., and joined Merrill Lynch in 1991, according to Finra registration records. Mr. Goetz began his career with Merrill Lynch in 1998, according to Finra records.

Latest News

Warren and Wyden press FINRA on ACATS transfer fraud gap
Warren and Wyden press FINRA on ACATS transfer fraud gap

Senators say brokerages leave accounts exposed to fraudulent transfers without verification, intensifying pressure as FINRA weighs its own fraud-hold rule

Forbes advisor list update: Morgan Stanley drops it, owner says changes are coming
Forbes advisor list update: Morgan Stanley drops it, owner says changes are coming

Meanwhile, the founder of advisor list gives reasons for secret $6 million payment to editor.

U.S. Bank names chief private banking officer for wealth unit
U.S. Bank names chief private banking officer for wealth unit

Internal C-level promotion comes as US Bank builds out private banking, athlete-focused advice and alternatives infrastructure.

Why planning is the only strategy that holds in every market
Why planning is the only strategy that holds in every market

A structured financial plan doesn't just prepare clients for the future, it transforms how they respond to the present.

Gemini, Apex deal reflects prediction markets move towards mainstream retail investing
Gemini, Apex deal reflects prediction markets move towards mainstream retail investing

Regulated prediction markets for retail brokerage clients is the latest sign that prediction markets are entering the mainstream investing toolkit.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income