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Regulators bar adviser Buck from securities industry

July 28, 2015

Thomas J. Buck, who built a reputation as one of Indiana's top investment advisers and brokers, has been barred from practicing in the securities industry, according to a recent Financial Industry Regulatory Authority filing.

Buck, considered a heavyweight at the local office of Merrill Lynch before the firm terminated him in March after 34 years, consented to the FINRA disbarment on July 23. FINRA said in the filing that Buck not only made unauthorized client trades, but "willfully committed fraud" as he steered clients to commission-based accounts while knowing it would have been less expensive for them to be in fee-based accounts.

"We've always talked about the fact that Mr. Buck was going to have to deal with FINRA as a result of all of this," former Indiana Securities Commissioner Mark Maddox said Tuesday morning. "And the permanent bar he's been given is the equivalent of the death penalty in the brokerage business. There's no coming back from that."

Buck, 61, retired from the Indianapolis office of RBC Wealth Management on July 21, RBC spokesman Burton Street said. Buck landed a job there in early April, and, despite the high-profile Merrill termination and the subsequent investor complaints, the firm said it was "pleased to welcome him."

"We are greatly disappointed to learn of these actions by Tom Buck, who is no longer with the firm," RBC said in a written statement Tuesday morning. "These actions are entirely inconsistent with the representations he made to us during the hiring process and stem from conduct that occurred while Mr. Buck was employed with another firm. They are in no way related to any activities during his time with RBC."

RBC declined to provide a phone number for Buck.

FINRA said Buck failed to assess the suitability of fee structures for certain clients and knowingly placed clients in commission-based accounts that were more expensive than fee-based alternatives.

He even misled them about the advantages of fee-based accounts, FINRA said, keeping them in commission-based accounts.

"In some instances, clients paid substantially more in commissions than they would have paid in fee-based accounts," FINRA said.

Buck, whom Barron's named the top financial adviser in Indiana in every year from 2009 to 2013, generated most of his revenue from commissions, FINRA said, a practice that differed notably from norms at his firm. About 80 percent of the revenue he generated came from commission-based activity, whereas approximately 70 percent of Merrill's Indiana revenue was generated through fee-based accounts, FINRA said.

"Buck's business [at Merrill] generated annual revenues ranging from $6 million to more than $10 million, at least 85 percent of which was directly attributable to Buck's individual production," Finra said.

Maddox said the disbarment will likely bolster the cases of investors that have filed complaints or suits against Merrill, because Buck's alleged improprieties happened on that firm's watch.

"What he chooses to do next is going to be up to him," Maddox said, "but it's going to have to be something he doesn't need a license for."
 

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