SEC Brings Case Against an Adviser Rep Who Uses Firm’s Billing System to Misappropriate Client Funds

September 5, 2014

The SEC brought an administrative action against John Pappas, who was employed as a registered representative and an investment adviser representative with Merrill Lynch, Pierce, Fenner & Smith (Merrill Lynch), a registered investment adviser and broker-dealer located in Birmingham, Alabama.  From November 2000 through June 2003, he was a registered representative and an investment adviser representative with Prudential Securities Inc., a registered investment adviser and broker-dealer located in New York, New York.
The SEC stated that Pappas converted $157,564 from three of his customers. He misappropriated the funds by accessing the bill payment feature in three separate customer accounts and directing payments to his personal credit card accounts. He also attempted to convert an additional $14,260.00 from a fourth customer account, but his attempts were halted by Merrill Lynch, which terminated Pappas’ employment on February 4, 2010. Pappas made the payments to his credit card accounts without the knowledge or consent of his customers.
Click here to access the administrative action.


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Investment Advisers