Broker Takedowns: Federal and State Agencies Are Looking For The Next Tom Buck and Ami Forte
The Tom Buck saga has been an epic meltdown worth paying attention to for a little more than three years. Eventually culminating in a 40-month federal prison sentence for the once revered and Barron’s Top 100 ‘certified’ financial advisor.
A short little recap. Tom was the biggest Merrill Lynch retail advisor in Indiana for more than a decade. Merrill compliance completed an audit and something didn’t smell quite right. Tom was let go. But that wasn’t the end of the story.
Federal prosecutors in Indianapolis took a liking to the details of the case and pursued what they saw as fraud amongst other criminal activities such as not telling clients about alternative fee structures available to them. Federal prosecutors brought charges and indicted Tom.
Tom settled, monetarily, with financial regulatory agencies to the tune of better than $5MM bucks.
He decided to plead guilty to a few of the charges brought against him. And after several delays (and proof of certain facts that clients weren’t monetarily harmed in any way and actually made money under his commission based tutelage) He was sentenced to 40 months in federal prison.
Now, word on the street is that federal prosecutors in several surrounding states (Illinois, Michigan, Ohio, Missouri) are looking to make the same kind of splash by pursuing so-called ‘bad actors’ within the broker ranks.
Federal prosecutors offices are aware of the press this case garnered and the ease at which it was executed. And they likely believe there are many other advisors out there with a similar profile.
While you may not want to admit it to anyone out loud, or even at the next branch office party or wholesaler golf junket – Tom Buck is a troubling tale for brokers who came up doing things a certain, and legal, way. Used to be, if an advisor of scale cut a corner or two he’d get a slap on the hand, maybe a note in his file, and be told to clean things up. All while keeping the entire process in house. But now?
If this story didn’t scare you and reset your idea or ‘risk management’ as an advisor we suggest you reconsider. Please take note and beware – times have remarkably changed. It is time to gird your loins.