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Ex-$1.3B Merrill broker sentenced to prison over fraud

A former Merrill Lynch advisor who was once one of the firm’s biggest brokers in Indiana was sentenced to 40 months in prison for defrauding his clients through excessive commissions.

Thomas Buck's sentencing in a federal court in Indianapolis this week comes after he settled civil charges with the SEC in October 2017 for $5 million. The regulator also barred Buck from the industry.

In addition to prison time, U.S. District Judge James Sweeney II ordered Buck to undergo two years of supervised release and 200 hours of community service. The judge recommended he serve his prison time in a facility close to Indianapolis, according to documents in filed in the U.S. District Court for the Southern District of Indiana.

Department of Justice DOJ

"We offer no excuses," says Buck's attorney, Robert Hammerle of law firm Hackman Hulett.

Hammerle says it was a question of appropriate sentencing. "There Is a marked difference between a Bernie Madoff and someone who has engaged wrong billing."
He also notes that the judge did not order any restitution.

From 2012 to 2015, Buck ran a scheme to overcharge clients and to hide those surcharges from them as well as his employer, according to court documents. Federal prosecutors said he intentionally mislead both parties; for instance, he did not inform clients when cheaper, fee-based options for his services were available at Merrill Lynch. He also instructed junior team members to inform Merrill Lynch in writing that he had told clients about cheaper options when he had not done so, according to prosecutors. Merrill Lynch supervisors were instead told that clients had elected for more expensive options that generated higher commissions for Buck.

During the relevant timeframe, 80% of Buck’s revenue came from commissions — even as 70% of all revenue from Merrill’s Indiana-based advisors was fee-based, according to court documents.

A FINRA investigation in 2015 showed Buck was generating annual revenues between $6 million and $10 million.

Buck was a longtime Merrill Lynch broker in Carmel, Indiana, having started his career at the company in 1981. The firm terminated him in 2015, according to FINRA BrokerCheck. Later that same year, he was barred from the industry by FINRA for allegedly making unauthorized trades and exercising discretion in client accounts without authorization.

Before his termination, Buck once boasted impressive numbers: a client base comprised of 800 households with 3,000 accounts representing $1.3 billion in assets. He was also chosen by Barron’s as one of the top advisors in Indiana.

An attorney for Buck did not immediately respond to a request for comment.

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