Ex-$1.3B Merrill broker to plead guilty to fraud, settles SEC charges for $5M
He was once a top-ranked Barron's advisor at Merrill Lynch, leading a team of 13 people and overseeing $1.3 billion in client assets.
On Tuesday, Thomas Buck agreed to plea guilty to one count of securities fraud in federal court and settled SEC charges of misconduct for $5 million, according to court documents.
Buck, 63, had worked at Merrill Lynch in Carmel, Indiana, for more than 30 years before the company terminated him in 2015. During his final three years at the firm, Buck defrauded clients by intentionally overcharging them, exercised discretion in non-discretionary accounts and misled clients about how much they were actually paying in commissions, according to federal prosecutors.
Buck's scheme cost investors more than $2 million, according to criminal charges filed Tuesday in federal court in Indianapolis. He faced a separate civil action brought by the SEC.
“These are not victimless crimes. These are crimes that can wipe out a family’s life savings and leave their financial future in ruins,” said W. Jay Abbott, FBI special agent in charge of the bureau's Indianapolis Division, in a statement.
Buck's actions have also cost Merrill Lynch; more 30 client complaints listed on his FINRA BrokerCheck record have been settled for over $5.3 million.
A spokesman for the bank says the company has "resolved issues raised by clients since Mr. Buck's termination in 2015." Merrill Lynch has also "proactively reached out to all clients who may have been affected by his conduct."
Buck's attorney could not be reached for immediate comment.
In 2013, Barron's ranked him as the no. 1 advisor in Indiana. The wirehouse discharged Buck in March 2015 for allegedly failing to properly disclose pricing alternatives with clients, providing inaccurate information to company management during account reviews and mismarking bond cross trade order tickets as unsolicited, according to a note in his BrokerCheck record.
A month later, RBC Wealth Management hired Buck, only to see him barred by FINRA in July. His daughter, Ann Buck, moved with him to RBC, where she is still employed according to FINRA BrokerCheck records. She was also a cheerleader for the Indianapolis Colts.
"We were greatly disappointed to learn of the actions by Tom Buck," an RBC spokeswoman for RBC. "These actions are entirely inconsistent with the representations he made to us during the hiring process."
Most of Buck's 13-member team stayed at Merrill Lynch following his termination. Until just before his departure, the group's client base comprised more than 800 households and 3,000 accounts, representing approximately $1.3 billion, according to SEC charges.
ODD BOOK OF BUSINESS
Buck's book of business was something of an oddity among brokers in the region, per the SEC. At the time, Merrill Lynch was encouraging its brokers to explore fee-based account options with clients.
"During the relevant period, approximately 70% of all revenue from Merrill Lynch’s Indiana-based financial advisors came from clients on a fee-based cost platform. However, during the same period, approximately 80% of the revenue from Buck’s customers came from commissions," according to the SEC.
Buck concealed his actions from Merrill Lynch compliance personnel, misleading them that he had made clients aware of the potentially cheaper pricing structures, authorities said.
He allegedly repeatedly entered false statements into the company's compliance system, stating, for example, in one instance that he had discussed fee-based options with a client when he had not done so.
Authorities did not specify how Buck spent his allegedly ill-gotten commissions.
In his settlement with the SEC, Buck agreed to pay about $2.8 million ill-gotten gains plus a penalty of $2.2 million. The agreement is subject to court approval.
In the criminal case, Buck has not been sentenced. He could face up to 25 years of imprisonment if convicted, according to prosecutors.
“Financial investors have a right to feel secure when entrusting oftentimes the bulk of their life’s savings to a financial advisor that the advisor will do no harm,” U.S. Attorney Josh Minkler said in a statement.