Merrill Lynch agreed to pay SEC $15+ million to settle charges that employees misled customers into overpaying for securities
Merrill’s RMBS traders and salespeople “illegally profited from excessive, undisclosed commissions — called ‘markups’ — which in some cases were more than twice the amount the customers should have paid” – SEC
Merrill also failed to have compliance and surveillance procedures in place that were reasonably designed to prevent and detect the misconduct that increased the firm’s profits
Advisor, Dean S. Mustaphalli, owner and operator of Mustaphalli Capital Partners Fund LP, was charged with operating a securities fraud scheme that involved targeting investors who were elderly and at or near retirement
In total, Mustaphalli allegedly fraudulently solicited his former clients to invest over $12 million and lost over $11 million of their money.
According to the indictment, Mustaphalli’s scheme brought in $5M+ from 22 victims between June 2014 and March 2017 and a separate civil lawsuit alleges that he fraudulently solicited an additional $7 million from prior investors between 2012 and 2014