The Securities and Exchange Commission on Friday barred a veteran Merrill Lynch manager based in Annapolis, Maryland, for defrauding a client from 2016 to 2020, according to the SEC's order.
A senior vice president and resident director of Merrill's Annapolis branch, Richard M. Crabtree has been on medical leave for the past two years. Over the four-year period, he deceived a client "into believing that he had invested $250,000 of the client’s funds into a private investment partnership that was held outside" of Merrill Lynch, according to the SEC.
Merrill Lynch is not named in the matter. Crabtree neither admitted to or denied the SEC's findings. According to a Merrill Lynch spokesperson, he no longer works for the firm.
Crabtree, 57, had been on medical leave from the firm since 2020, according to the SEC, and was later diagnosed with post-traumatic stress disorder and dissociative identity disorder. He could not be reached Tuesday morning to comment. According to the SEC's order, Crabtree didn't profit from the conduct that got him barred and was ordered to pay a penalty of $40,000.
According to the SEC, Crabtree "falsely represented to the client that the trading strategy was
highly profitable and that the client’s interest in the private investment partnership grew to as
high as approximately $10 million."
That was not true, according to the SEC's order.
"Crabtree never invested any of the client’s funds into a private investment partnership, and none of its profits were real," according to the SEC. To perpetuate and conceal the fraud, Crabtree repeatedly falsified records, including portfolio review reports, trading records, data in Merrill Lynch's system and mortgage payout letters. He also liquidated securities in one of the client’s advisory accounts.
Crabtree's BrokerCheck profile shows he had worked at Merrill Lynch in Annapolis since 1988, making him a 34-year veteran of the firm. He has four customer disputes on his record, three of which were settled and one closed with no action. The most recent customer dispute last month was settled for $1.25 million, according to BrokerCheck.
The deception became more elaborate as time passed. In early 2020, Crabtree used his personal cell phone to send the client pictures of data on his computer screen showing the total value of the client's assets at $7.15 million, when in actuality the value was $986,000.
"Crabtree then told the client that he used profits from the private investment partnership to pay the mortgages on the client’s primary and vacation homes," according to the SEC. "However, Crabtree
used cash from one of the client’s advisory accounts for the mortgage payments. And when there
was insufficient cash to cover them, Crabtree liquidated securities in the same advisory account to
cover the mortgage payments."
Survey finds AI widely embedded in research and analysis, but barely touching portfolio construction or trade execution.
Two firms land teams managing more than $1.1 billion in combined assets from Kestra and Edward Jones.
A private partnership, Edward Jones is a giant in the retail brokerage industry with more than 20,000 financial advisors.
Meanwhile, Raymond James and Tritonpoint Partners separately welcomed father-son teams, including a breakaway from UBS in Missouri.
Paul Atkins has asked staff to solicit public comment on novel ETFs, pausing the clock on as many as 24 filings linked to the booming event contracts market.
Wellington explores how multi strategy hedge funds may enhance diversification
As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management
