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Top-producing broker returns with strings attached: Marc Jaffe has restrictions he must abide by in new job

April 18, 2005

A top, albeit troubled, Indianapolis stockbroker has re-entered the investing arena via a Florida-based employer and a new restricted license.

However, Marc Jaffe's fresh start includes a couple of clouds carried over from his past two jobs: lingering criminal charges for some alleged threats and a lengthy consumer complaint list.

Jaffe, 49, started working last fall for Tampa Bay, Fla.-based GunnAllen Financial Inc. from a 96th Street office in Indianapolis a few months after he was fired by his previous employer, Morgan Stanley.

His return came with several strings attached. Jaffe and GunnAllen had to agree he would receive "strict supervision," according to an agreement filed with the Indiana Secretary of State Securities Division.

He agreed not to exercise discretionary authority over any of his Indiana customer accounts. The two-year agreement also states that he can only work out of one branch.

"Basically, we have to monitor his every move," said Richard M. Nummi, GunnAllen's executive vice president and corporate counsel, of his company's lone Indiana representative.

Jaffe's license allows him to practice as a stockbroker and investment adviser. The agreement lays out general parameters the broker and his employer must agree to in order for that to happen, said Amy Wolf, Indiana's chief deputy securities commissioner.

The state looks at factors like the broker's record, years in the industry and the nature of the complaints against him before it decides whether to issue one of the restricted licenses, Wolf said. It is a way for securities officials to express concern without rejecting a license application.

"It's our way to make a demand, I guess, on the broker-dealer," she said. "We want [employers] to understand [they're] responsible for this person, and ... need to give them increased supervision."

Nummi said GunnAllen went along with the agreement only after he delved deeply into Jaffe's record and visited Indianapolis to meet with him and his lawyer, former Indiana Securities Commissioner Brad Skolnik.

Securities records show 25 complaints filed against Jaffe dating back to 2001. Most relate to his tenure with Merrill Lynch, his employer before Morgan Stanley.

They allege that Jaffe made unsuitable recommendations, churned accounts to generate commissions, and made unauthorized trades, among other things.

On top of that, Morgan Stanley fired Jaffe in August after he was charged with one felony and two misdemeanor counts of intimidation. Prosecutors have said the charges stem from heated voice mail messages Jaffe left for fellow brokers Matt Burton and John Cate, who were dissolving their relationship with him.

Those charges carry possible sentences of a year in jail for the misdemeanors and six months to three years in prison for the felony, according to Lee Buckingham, a deputy prosecutor with the Hamilton County Prosecutor's Office.

The case is pending; a pretrial conference is set for April 18.

Keith Shake, another of Jaffee's attorneys, has said that while his client may have said things in anger, "it certainly doesn't cross the line into criminal conduct."

Jaffe referred questions to Nummi, who dismissed many of the broker's customer complaints as well.

"The more I looked at the complaints, the more I kind of scratched my head," he said. He noted that the complaints came in bunches, and, "If you're a bad guy, you typically get this over your career instead of in one shot."

He said Skolnik and Jaffe told him they believe the complaints were prompted or encouraged by Merrill Lynch and Jaffe's colleagues there to prevent Jaffe from taking his business when he left. Merrill Lynch flatly denies that claim, according to spokesman Mark Herr. "It is simply not true," he said. "Those allegations are as false as they are absurd."

Skolnik declined to comment on Nummi's Merrill Lynch claim, but he did say a certain amount of tension develops whenever a "big producer" leaves a firm.

He chalks up most of the complaints to disappointment about the overall market.

"Regardless of why these complaints were filed, it's very clear to me that these complaints really do not reflect any wrongdoing on the part of Marc Jaffe," Skolnik said. "He's a very capable broker who still has a very loyal clientele that he continues to serve to this day."

Jaffe works with about 250 clients and has $200 million under management at his new job, Nummi said.


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