David G. Zeng (Zeng) was recently barred from the financial industry by The Financial Industry Regulatory Authority (FINRA) over allegations that the broker failed to respond to the regulator’s inquiries concerning at least a dozen customer disputes initiated against the broker. The customer complaints against Zeng include claims of misrepresentations, fraud, unsuitable investments, and unauthorized trading concerning stock investments.
It is also possible that Merrill Lynch, Pierce, Fenner & Smith Inc. (Merrill Lynch), Zeng’s employing firm during the majority of the customer complaints, failed to properly supervise Zeng’s securities activities. Under FINRA Rule 3010, a brokerage firm is obligated to properly monitor and supervise its employees. The rule states that “[e]ach member shall establish and maintain a system to supervise the activities of each registered representative…that is reasonably designed to achieve compliance with applicable securities laws and regulations…” Thus, brokerage firms are responsible for monitoring a broker’s investment recommendations to clients, outside business activities, and representations to investors.
Zeng became registered with FINRA in 2001 at Morgan Stanley Dean Witter Inc until June 2005. From June 2005 until May 2009, Zeng was associated with UBS Financial Services, Inc. Thereafter, from April 17, 2009, until December 20, 2011, Zeng was employed by Merrill Lynch and worked out of the firm’s Santa Fe, New Mexico office.
On January 2, 2013, Merrill Lynch filed an Amended Uniform Termination Notice (also known as a Form U-5A) that contained an allegation that the Respondent improperly created fictitious account statements and provided them to his uncle, who was not a customer at Merrill Lynch. The U-5A also stated that the Respondent was subject to several customer complaints alleging unsuitable trading, misrepresentations and omissions.
On February 5, 2013, FINRA sent Zeng a letter pursuant to FINRA Rule 8210 requesting a written statement concerning several of the customer complaints that Merrill Lynch became aware of after Zeng resigned from the Merrill Lynch. FINRA has stated that Zeng failed to provide the requested written statement to date. On March 7, 2013, Zeng informed FINRA that he would not cooperate with FINRA’s requests for testimony and documents in connection with FINRA’s investigation. By failing to respond to FINRA’s requests for information and documents, Zeng violated FINRA Rule 8210. In addition, FINRA alleged that Zeng violated FINRA Rule 2010, which requires the observance of high standards of commercial honor and just and equitable principles of trade. Consequently, FINRA barred Zeng from association with any broker or dealer.
The attorneys at Gana LLP are experienced in investigating claims of misrepresentations and fraud, unsuitable investment strategies, and unauthorized trading. Our attorneys can help you detect and uncover suspicious activity in your accounts. Our consultations are free of charge and the firm is only compensated if you recover.