A former representative for Merrill Lynch has been penalized for rule violations involving misleading or false statements, ThinkAdvisor reports.
Mark S. Sorrell was suspended for nine months and fined $5,000 by the Financial Industry Regulatory Authority over his actions, according to a letter of acceptance, waiver and consent.
“From December 2023 to January 2024, without Merrill Lynch’s knowledge or approval, Sorrell prepared, signed, and disseminated from his firm email address three proof of funds letters to a third party on behalf of his customer concerning funds the customer was going to use to purchase a home,” FINRA said in its order. “In the letters, Sorrell made materially misleading or false statements about the availability of the customer’s funds for purchasing the home.”
FINRA pointed out that a proof of funds letter is a written verification confirming that a client has sufficient assets to complete a specific transaction, typically in connection with mortgage applications, audits and other third-party requests.
Merrill Lynch’s written supervisory procedures required registered reps to obtain supervisory review and approval prior to distributing any proof of funds letters on behalf of a client.
According to FINRA, Sorrell also stated that he knew the customer had sufficient funds to complete the transaction even though the customer lacked sufficient funds at the firm, and the rep never verified whether the customer held sufficient funds elsewhere.
It was also alleged that Sorrell falsely represented that the customer had generated sufficient funds to purchase the home through the sale of a bond held outside the firm even though, as Sorrell was aware, the customer had not sold the bond.
On Sept. 16, 2024, Merrill Lynch filed a Form U5 disclosing Sorrell’s termination based on “[c]onduct including providing an inaccurate proof of funds letter on behalf of a client.”
FINRA took up the matter after its review of the Form U5.
Sorrell was found to have violated FlNRA Rule 2010, which requires associated persons to observe high standards of commercial honor and just and equitable principles of trade in the conduct of their business.
A registered representative who makes misrepresentations of material fact violates Rule 2010.
Sorrell accepted and consented to FINRA’s findings without admitting or denying them.
At Hyman Cotter, we have experience dealing with a broad range of claims that rise to the level of financial advisor misconduct. Our team includes lawyers who have worked for large financial institutions, including Morgan Stanley and UBS Financial Services, and regulatory bodies such as the SEC. If you think your financial professional or firm engaged in misconduct that caused you investment losses, contact Hyman Cotter at (833) 665-0784 or through our online contact form for a no-cost evaluation of your matter.
