Broker Manuel Melendez Barred after Allegations of Loans from Customers
On April 15th, 2025, financial advisor Former UBS broker Manuel Melendez has reportedly been permanently barred from the securities industry. According to FINRA’s findings, Melendez allegedly borrowed $738,000 from two clients without UBS’s knowledge or approval and is accused of misusing the funds.
According to FINRA, from 2018 to 2021, Melendez purportedly took four undisclosed loans, including $300,000 from a 65-year-old woman to fund a billboard advertising business. He reportedly promised repayment with interest but instead used some of the money on personal expenses like cruises and retail purchases.
Another $438,000 came from a second client for supposed investments in an ice cream and sign business, but these loans were allegedly mostly undocumented, not repaid, and used improperly. Melendez also reportedly falsified compliance forms and failed to disclose these outside business activities.
UBS later settled with both clients, including a $390,000 settlement in January 2023 for one of the disputes. Melendez reportedly consented to FINRA’s findings without admitting or denying the charges.
FINRA Rule 3240 Borrowing from Customers
FINRA Rule 3240 states that stockbrokers may only borrow from or lend to a customer if their firm has a policy in place allowing this type of financial arrangement. However, most brokerage firms generally prohibit the practice.
Such loans have the potential for abuse of customers, especially older investors. This action of borrowing or lending money from customers can create a conflict of interest and can also be seen as unethical. This can also cause harm to the relationship between customer and client which can then lead to legal and financial issues. Maintaining a professional relationship with customers is imperative and violating that trust tends to hard reputations of companies or small businesses.
FINRA BrokerCheck: Manuel Melendez
The FINRA BrokerCheck tool is a free online tool that allows investors to research and verify the background and credentials of financial brokers, brokerage firms, and investment advisors registered with FINRA.
According to his FINRA BrokerCheck report, Manuel Melendez has five customer complaints filed against him. Allegations include unsuitable, unapproved outside business ventures, breach of contract, negligence, and misrepresentation, among others. He was affiliated with the following firms during his career, among others.
04/28/2023 – 09/20/2023 HERBERT J. SIMS & CO, INC. (CRD#:3420) GUAYNABO, PR
05/08/2007 – 05/24/2023 UBS FINANCIAL SERVICES INC. (CRD#:8174) SAN JUAN, PR
Red Flags and Failure to Supervise
When financial advisors engage in unethical or fraudulent practices, such as misrepresenting investments, unauthorized trading, or misusing client funds they can be held responsible for investment losses. FINRA-registered broker-dealers have a duty to supervise their brokers to prevent such misconduct. If the firm fails to supervise its brokers properly, it can be held liable through FINRA arbitration.
Class Action Lawsuit vs. Individual FINRA Arbitration Lawsuit
You may wonder whether a large class action lawsuit is a better litigation option than an individual FINRA arbitration case. The answer depends on many factors, but typically if the loss sustained is large (say larger than $100,000), an individual arbitration claim is likely a better option. Class action lawsuits as a recovery option are more appropriate for grouping large numbers of individuals who have small claims – too small to generally pursue individually.
FINRA Lawsuits
If you have suffered investment losses with Manuel Melendez and UBS Financial, the securities attorneys at the White Law Group may be able to help you by filing a FINRA lawsuit. Please call our offices at (888) 637-5510 for a free consultation. We take cases in all 50 states and Puerto Rico.
National Securities Attorneys
The White Law Group, LLC is a national law firm in securities fraud, securities arbitration, investor protection, and securities regulation and compliance. With offices in Chicago, Illinois and Seattle, Washington, the firm is dedicated to assisting investors across all 50 states with claims against their brokerage firms. Since its founding in 2010, The White Law Group has handled over 800 FINRA arbitration cases.
Last modified: April 18, 2025
