Former Merrill Broker Pleads Guilty To Fee Fraud, Faces Up To 25 Years

A major Indiana broker is facing up to 25 years in prison after pleading guilty to scamming clients out of $2.5 million by charging excessive commissions and fees, authorities said Tuesday.

In a parallel investigation by the SEC, Thomas J. Buck has agreed to pay more than $5 million to settle a lawsuit brought against him by the regulatory agency.

Buck, a former registered representative and advisor with Merrill Lynch, Pierce, Fenner & Smith in Indianapolis, settled the SEC’s lawsuit by consent order in the U.S. District Court for the Southern District of Indiana on Tuesday.

Buck reaped $2.5 million in excessive commissions and fees from at least 50 clients as he took advantage of Merrill Lynch’s compensation system for his own gain in a three-year scheme, all while allegedly assuring clients in commission-based accounts that the total commissions they paid would not exceed “certain limits,” according to the SEC’s complaint.

The U.S. Attorney’s office for the Southern District of Indiana unsealed criminal securities fraud charges against Buck on Tuesday. The office stated that Buck pleaded guilty in a hearing on Tuesday and that sentencing was scheduled for Jan. 18.

Buck was a registered advisor with Merrill Lynch for more than 30 years, leading a large Indianapolis-based team for the firm, according to the U.S. attorney’s office.

Buck’s Finra Brokercheck record states that his team at one time managed about $2 billion and produced up to $10 million in annual revenue for Merrill Lynch, and that more than 80 percent of that revenue was from “commission-based activity.”

Those client accounts generated commissions for Buck in excess of the amounts that he promised, according to the SEC, which added that he failed to inform the clients that their total commissions were exceeding the limits he had set.

The complaint also alleges that Buck falsely represented to clients that their total annual commissions were within the promised limits.

The SEC also alleged that Buck intentionally neglected to tell clients that a fee-based option might be cheaper compared to the total annual commissions being paid on trades executed in their accounts, and that he impermissibly exercised discretion by placing trades in the accounts of some customers without authorization.