Federal prosecutors are asking a judge to impose a 78-month prison sentence on Thomas Buck, the former Merrill Lynch broker who in 2018 pled guilty to one count of securities fraud and agreed to pay a $5 million penalty.
Buck’s sentencing hearing is set for 1:30 p.m. Friday in U.S. District Court in Indianapolis.
“The facts of this case reflect a brazen and insidious fraud predicated on the defendant abusing not only his position as a financial advisor, but also his unique tenure and stature as a long-time, successful Merrill Lynch broker in Indiana,” the U.S. Attorney’s Office said in a court document filed on Friday.
The case against Buck centers on his having kept clients in commission-based accounts even as the securities industry moved toward fee-based accounts, which in many cases were cheaper for clients—actions that federal prosecutors say were motivated by Buck’s “insatiable greed.”
In his guilty plea, Buck admitted that he had lied to Merrill Lynch by saying that he had discussed account options with certain clients when he had not. He also admitted to, on occasion, making trades for his clients without obtaining their approval.
Indianapolis attorney Bob Hammerle of Hackman Hulett LLP, who is a member of the legal team representing Buck, declined to comment on the proposed sentence.
Buck ranked as one of the nation’s top 100 financial advisers when Merrill Lynch terminated him in March 2015, citing its “loss of confidence” in the 61-year-old after 34 years with the firm.
In July of that year, the Financial Industry Regulatory Authority barred Buck from practicing in the securities industry.
According to the prosecutors’ filing, Buck was earning more than $600,000 per year at the end of his tenure with Merrill Lynch. “Accordingly the only explanation for defrauding his clients was the defendant’s insatiable greed," the filing said.
Since 2015, Merrill Lynch has paid out more than $5.3 million in settlements to Buck's former clients.
Prosecutors allege that Buck’s actions caused $2 million in client losses, a conservative estimate that accounts for the possibility that some clients might have chosen to remain in commission-based accounts even if they had been given the choice to switch.
Prosecutors also say they expect Buck to argue that his actions actually caused no financial loss to clients.
Last spring, just days before his sentencing hearing was to have taken place, Buck’s attorneys filed documents arguing that the government’s calculations were in error and that Buck’s actions had actually saved his clients money overall.
Federal sentencing guidelines call for a prison term between 78 and 97 months, the sentencing memorandum says.
A 78-month sentence is sufficient to “send a message to other financial advisors and those occupying positions of trust,” the document says.