FINRA suspends Minnetonka, MN Broker from Merrill Lynch

FINRA (Financial Industry Regulatory Authority, Inc), the private corporation that acts a self-regulatory organization to regulate, enforce and arbitrate operations of the securities industry, recently suspended Broker Ethan De Naray of Minnetonka, Minnesota.  

The group found De Naray engaged in unauthorized trading of his customers’ accounts while at Merrill Lynch. This resulted in suspension for one month because of the allegations.  Click here to read their findings.

These findings state that he miss-marked order tickets. These were unsolicited when, in fact, the trades memorialized by the order tickets were solicited. In other words, De Naray made recommendations to his clients and then suggested it was their idea. This is illegal. According to his CRD, Merrill Lynch terminated Mr. De Naray shortly thereafter. Yet, this does not change Merrill Lynch’s potential liability for his actions.

The distinction of solicited vs. unsolicited is very important in the securities industry. Any trade recommended by a broker, he and his employer have a duty to ensure that it was suitable for the customer. In this case, Merrill Lynch was permitting Mr. De Naray to recommend that its customers buy “put options,” a recommendation that was inconsistent with Merrill Lynch having a “buy rating” for the underlying security.

Allowing recommended transactions that are not appropriate for the customer is a breach of Merrill Lynch’s duty. This is a basis for liability for the customer to recover their losses. 

If you lost money as a result of being a customer of Mr. De Naray of Merrill Lynch, you may be able to recover those losses.