The Blog Of The Securities Industry Professional Association

A New Way to Steal Client Money

How FINRA and Merrill Lynch now define theft 

 Every month I peruse the monthly disciplinary actions for two reasons. First to see what the trend of actions currently is and secondly to see if I know any of the firms or people who are being named.  This month was no different but one case in particular jumped out at me.  A Merrill Lynch broker named Charles Bishop was suspended from FINRA association for two years and fined $7500.  As I read the legal brief it stated that the broker had an elderly client in South Florida and attempted to misappropriate (steal) over three million dollars from this poor old lady.   I couldn’t believe that FINRA was saying “misappropriate” instead of stealing and I couldn’t believe he only received a fine of $7500 for it.  I decided to click on the actual complaint and signed settlement and my jaw dropped Click here to read complaint

 In a nutshell, the elderly and dying woman wanted her 3 million dollar account to be transferred upon her death to a dog shelter in Florida and created a entity named ‘Dancing Bear Kennel, Inc.”  She had prize show dogs and wanted them to be provided for with this money after she died.  Her broker Bishop set up a company with almost the same exact name in the state of Florida called Dancing Bear Kennel, LLC and listed the address as his home and listed himself as the sole partner and manager of this new company.  In addition, on the Transfer of Death form he inserted his company tax id number.  Similar name but different companies knowing that upon her death 3 million would be wired to him.  After a string of bone headed moves, including hiring attorneys to try and get the money released from the court he was finally caught.  Sort of.

Merrill Lynch fired him on May 29,2009 and being the ethical giant they are they made sure to mark up his U-5 with tough verbiage that would make it almost impossible for another firm to hire him.  The words FRAUD, THEFT, EMBEZZLEMENT, SECURITIES FRAUD, pop right into my mind but not Merrill.  They fired him for “inheriting assets from a deceased client that was not a family member”.  That will teach him.  Next time he’d better only attempt to steal from direct family members.  The sick part of this is that at an arbitration hearing with Merrill Lynch, the panel ordered that his form U-5 be amended to “attempting to inherit assets from a deceased client that was not a family member”.  Huh?  To this day his record is recorded with an ‘”attempt at inheriting”.  You cannot attempt to inherit.  You can attempt theft but the only way you can inherit is to be inserted into the will.  Maybe guys who rob jewelry stores or shop lift can use this as their excuse?  “I wasn’t stealing that ring officer, I was attempting to inherit it”.  Just because you fail at theft it doesn’t mean that no crime took place.  After all if you walk into a bank and try to cash a fake check don’t they call the police even if they didn’t cash it for you?  This case should have been turned over to the police and this clown should have been arrested.  As if this story cannot get any more bizarre, after being fired by Merrill he immediately went to work for an Registered Investment Advisory firm where he worked for two more years.  There was literally no delay in getting him up and running with an SEC registered advisory firm and in less then 2 years, a customer has filed suit against him for negligence, breach and more words that seem to be harsher then attempting to inherit.   For his attempt at a 3 million theft he paid the ultimate sacrifice from FINRA: a two year suspension and a $7500 fine, no jail time, no criminal investigation.  That will surely defer him from ever attempting to steal millions of dollars again because the punishment is not worth the reward..and yes, I am laughing out loud as I write these words.

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December 12th, 2012


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