FINRA Suspends Merrill Lynch Broker Robert Gerstein for Allegations of Unsuitable Trading
According to reports this week, FINRA has fined and suspended former Merrill Lynch advisor Robert Gerstein over allegations of unsuitable short-term trading of mutual funds and other complex investment products.
Without admitting or denying FINRA’s allegations, Gerstein reportedly agreed to a six-month suspension, and will pay a fine in the amount of $5,000, restitution of $129,496 in commissions, plus interest.
Gerstein allegedly recommended short-term trading of securities generally intended to be long-term investments and mismarked solicited sales transactions as unsolicited, according to FINRA’s letter of acceptance, waiver and consent.
Gerstein, in a four-year period, purportedly recommended and effected 234 trades of class-A mutual funds for three customers for an average holding period of 198 days, despite the long-term nature of the investments, according to FINRA.
FINRA further alleged that Gerstein also recommended short-term trading of other products that Merrill considered long-term investments, such as unit investment trusts and market-linked investments. During the same time, Gerstein allegedly recommended 14 UIT purchases in three of the same accounts and sold them prior to maturity — all within a year and two in less than three months, according to the regulator. Merrill’s rules required its representatives to consider whether the client had “a long-term buy and hold strategy” of more than five years before recommending UITs.
Gerstein also recommended six MLI purchases in three of the accounts and sold them prior to maturity, all within three to six months, according to FINRA. Merrill reportedly intended MLIs to be held to maturity.
FINRA also alleged that on four customer accounts, Gerstein marked as “unsolicited” order tickets for 150 sales transactions despite having solicited each of the transactions.
Gerstein allegedly violated FINRA rule 2111, (suitability of recommended investments) and allegedly caused Merrill Lynch to violate rule 4511, which requires maintenance of proper books and records; and violated rule 2010.
FINRA Rules on Suitability
The suitability rule is commonly referred to as FINRA Rule 2111, or simply the Suitability Rule. FINRA Rule 2111 sets forth the obligations and standards that brokers and financial advisors must follow when recommending investments to their clients.
FINRA Rule 2010 requires “high standards of commercial honor and just and equitable principles of trade,” for its registered representatives.
FINRA BrokerCheck – Robert Gerstein
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.
BrokerCheck provides investors with detailed information about the professional history, qualifications, and regulatory actions of brokers and brokerage firms. Investors can use the tool to verify whether a broker or brokerage firm is registered with FINRA. It’s also a great way to review their employment history, licensing status, and any regulatory actions or complaints filed against them.
According to his FINRA broker report, Robert Gerstein was reportedly affiliated with Merrill Lynch, New York, New York, for the past 44 years. Gerstein’s BrokerCheck record indicates four customer complaints have been filed against him. Allegations include unsuitable investment recommendations and misrepresentation and unauthorized trades, among others.
Recovery of Investment Losses
The White Law Group is investigating potential securities claims involving Robert Gerstein and the liability his employers may have for failure to supervise him. Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Seattle, Washington. We represent investors in all 50 states including New York. Our attorneys have recovered millions of dollars from many brokerage firms in the past.
If you are concerned about your investments with Robert Gerstein, please call the securities fraud attorneys at The White Law Group at 888-637-5510 for a free consultation.
For more information on The White Law Group, and its representation of investors, please visit WhiteSecuritiesLaw.com.
Tags: broker investigation, FINRA, Merrill Lynch, Robert Gerstein Last modified: July 31, 2023