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U.S. Securities and Exchange Commission

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23974 / October 31, 2017

Securities and Exchange Commission v. Thomas J. Buck, Civil Action No. 1:17-cv-3984 (October 31, 2017) (S.D. Ind.)

Broker Settles Charges of Increasing Personal Income With Excessive Commissions And Fees

A former Merrill Lynch broker has agreed to pay more than $5 million to settle SEC charges that he fraudulently schemed to increase his personal income by obtaining excessive commissions and fees from investors.

According to the SEC's complaint, Merrill Lynch paid financial advisors a portion of the commissions, fees, or other revenue they generated in customer and client accounts. The SEC alleges that Thomas J. Buck represented to certain customers with commission-based accounts that the total annual commissions they paid would not exceed certain limits, and then he traded in those accounts and generated commissions that exceeded the amounts he promised.

The SEC alleges that Buck failed to inform the customers that their total annual commissions were exceeding the promised limits and falsely represented to several customers that their total annual commissions were within the promised limits. According to the SEC's complaint, Buck also intentionally failed to inform the customers that a fee-based option could be cheaper compared to the total annual commissions being paid based on trades executed in an account. The SEC also alleges that Buck impermissibly exercised discretion by placing trades in the accounts of certain customers without authorization.

According to the SEC's complaint, Buck received more than $2.5 million in excessive commissions and fees from at least 50 retail customers and investment advisory clients in a scheme that lasted at least three years.

The SEC's complaint, filed in federal district court in Indianapolis charges Buck with violating Section 17(a) of the Securities Act, Section 10(b) of the Securities Exchange Act and Rule 10b-5, and Sections 206(1) and 206(2) of the Investment Advisers Act.

In a parallel action, the U.S. Attorney's Office for the Southern District of Indiana unsealed criminal charges against Buck.

In the SEC settlement, Buck agreed to pay disgorgement of $2,561,236.71 in ill-gotten gains plus interest of $296,806.31 a penalty of $2,233,594.12. Any restitution amount paid in the parallel criminal case would be subtracted from the disgorgement amount owed in the SEC settlement. Buck consented to the entry of a final judgment permanently enjoining him from violating the provisions charged in the SEC's complaint. The settlement is subject to court approval.

The SEC's investigation was conducted by Aleah Borghard and supervised by Brian D. Fagel. The SEC appreciates the assistance of the U.S. Attorney's Office for the Southern District of Indiana and the Financial Industry Regulatory Authority.

SEC Complaint

 

https://www.sec.gov/litigation/litreleases/2017/lr23974.htm


Modified: 10/31/2017