FINRA Suspends Former Merrill Broker for Misrepresentations in Proof of Funds Letters
From the desk of Jim Eccleston at Eccleston Law
FINRA has disciplined a former Merrill Lynch representative after determining that he issued inaccurate and misleading statements about a client’s financial ability to complete a home purchase.
As reported by ThinkAdvisor, the representative prepared and sent multiple proof of funds letters to a third party over a two-month period. He used his firm email account and acted without obtaining the supervisory approval required under firm policy.
Proof of funds letters carry significant weight in real estate and lending transactions because they confirm whether a buyer has sufficient assets to close a deal. According to ThinkAdvisor, Merrill Lynch required registered representatives to secure review and approval before issuing such documentation. The representative did not follow that process.
ThinkAdvisor reports that FINRA found that the letters contained materially false statements. The representative asserted that the client had adequate funds to complete the purchase despite knowing the client lacked sufficient assets at the firm. He also failed to confirm whether the client held assets elsewhere. In addition, he claimed the client had generated funds through the sale of a bond held outside the firm, even though no such sale had occurred.
The firm terminated the representative in 2024 and disclosed the circumstances in a Form U5, which led to FINRA’s investigation. The representative resolved the matter by consenting to FINRA’s findings without admitting or denying them through a FINRA Acceptance, Waiver and Consent (AWC) letter. FINRA imposed a nine-month suspension and a $5,000 fine.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
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