A former representative for Merrill Lynch was sanctioned over rules violations pertaining to outside business activity, according to Advisor Hub.
Jeremiah Householder was suspended for six months and fined $7,500 by the Financial Industry Regulatory Authority, which said he directed Merrill Lynch clients seeking loans to an unapproved third-party lender owned by his brother-in-law.
FINRA noted that Merrill Lynch’s supervisory procedures required registered representatives to provide written notice to the firm before engaging in any outside business activity and prohibited registered representatives from engaging in such activity unless they had received approval from the firm.
“While registered with Merrill Lynch, Householder was responsible for working with firm customers who had banking needs, including customers who needed loans, and connecting those customers with the relevant personnel at the firm’s banking affiliate,” FINRA said in its settlement letter. “From at least September 2023 through May 2024, Householder referred four Merrill Lynch customers who sought loans from Merrill Lynch to a third-party lending company owned by his brother-in-law. In exchange for these customer referrals, Householder received approximately $60,000 in compensation from the third-party lending company.”
The authority stated that Householder never notified or sought approval from Merrill Lynch to engage in this activity. Furthermore, in his March 2024 annual compliance certification, he was reported to have falsely attested that he was not engaged in any undisclosed outside business activities.
These actions were found to be a violation of FINRA Rule 3270, which states in part, “No registered person may be an employee, independent contractor, sole proprietor, officer, director or partner of another person, or be compensated, or have the reasonable expectation of compensation, from any other person as a result of any business activity outside the scope of the relationship with his or her member firm, unless he or she has provided prior written notice to the member, in such form as specified by the member.”
A violation of FINRA Rule 3270 is also a violation of Rule 2010, which requires that members observe high standards of commercial honor and just and equitable principles of trade in the conduct of their business.
Householder, who is no longer registered as a broker or investment advisor, accepted and consented to FINRA’s findings without admitting or denying them. He could not be reached for comment by AdvisorHub. A Merrill spokesperson declined to comment.
In November 2024, Merrill Lynch filed a Uniform Termination Notice for Securities Industry Registration (Form US) on Householder’s behalf, disclosing that he had voluntarily resigned from the firm while he was under internal review for “conduct involving failure to disclose outside business activities.”
At Hyman Cotter PC, we understand the complexities that come with being the subject of a regulatory inquiry by the SEC, state regulators and other self-regulatory organizations such as FINRA and other exchanges. If you are the subject of a regulatory proceeding, contact us at 312-291-4600 or through our online contact form for a free consultation.
