A Summer of BD Discontent

Jordan A. Thomas weighs in on the importance of protecting customer assets

In June 2016, the SEC announced a $415 million settlement with broker-dealer Merrill Lynch for its misuse of customer funds to generate profits for the company and failing to safeguard customer securities from the claims of its creditors, breaching Rule 12(c)3-3, the “Customer Protection Rule.” This enforcement action against Merrill Lynch was precipitated by whistleblowers represented by [Jordan Thomas][prior firm][‘s].

Following this settlement, the SEC is now looking into how cash is managed at a number of broker-dealers. Broker-dealers now have until November 1 to self-report any non-compliance.

Jordan A. Thomas, Chair of [prior firm][‘s] Whistleblower Practice said, “After the global financial crisis, the importance of protecting customers’ assets from misuse or insolvency cannot be overstated. This case will serve as a cautionary tale for other financial institutions about how quickly little mistakes, breakdowns in judgment and old-fashioned greed can snowball into expensive front-page scandals.”