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Former Merrill Lynch Broker Sylvester Knox Investment Losses

Posted on Tuesday, July 9th, 2019 at 3:26 pm    

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Erez Law is currently investigating former Merrill Lynch broker Sylvester Knox (CRD# 1625705) regarding investment losses due to unauthorized transactions. Knox was registered with FSC Securities Corporation in Short Hills, New Jersey from January 2017 to August 2018. Previously, he was registered with Merrill Lynch, Pierce, Fenner & Smith Incorporated in Short Hills, New Jersey from 2000 to 2017, when he was terminated regarding, “Conduct including engaging in unauthorized transactions in certain client accounts, making misrepresentations to certain clients and conduct inconsistent with Firm policies related to client complaints and outside speaking engagements.”

In August 2020, FINRA sanctioned Knox to a $10,000 civil and administrative penalty and fine and suspended him for nine months, after he “consented to the sanctions and to the entry of findings that he effected transactions with a total principal value of approximately $1.7 million in the accounts of customers of his member firm without the customers’ authorization or consent.” According to FINRA’s Acceptance, Waiver & Consent (AWC), “the findings stated that Knox exercised discretionary trading authority and effected transactions with a total principal value of approximately $2 million in the accounts of firm customers without having obtained prior written authorization from the customers or approval from the firm to treat the accounts as discretionary. The findings also stated that Knox willfully failed to timely disclose material information via the filing of an amended Form U4. In addition, Knox falsely attested on firm compliance questionnaires that he did not have this disclosable matter and on one compliance questionnaire that he did not use discretionary trading authority. Knox also made misstatements to the firm regarding whether the customers authorized transactions when responding to supervisory inquiries.”

In March 2018, the Florida Office of Financial Regulation issued a Notice of Intent to Deny the application of Sylvester Knox as an associated person of FSC Securities Corporation. 

In January 2018, Michigan sanctioned Knox to a $1,500 civil and administrative penalty. The allegations were regarding, “The Administrator intends to revoke, suspend, condition, or limit the securities agent registration of Sylvester Knox under section 412(2) of the Securities Act, MCL 451.2412(2), because he is subject to a cease and desist order by a state securities regulator, and because he has engaged in dishonest or unethical business practices in the securities industry within the previous 10 years, which support the revocation of his securities agent registration under the above-cited provisions of the Michigan Uniform Securities Act (2002), 2008 PA 551, MCL 451.2101 et seq.”

Knox has been the subject of 25 customer complaints between 1999 and 2018, three of which were denied, according to his CRD report. Recent complaints include: 

May 2018. “The Customer alleges unauthorized trading on January 22, 2013.” The case was settled for $5,000. The case was regarding municipal debt and it took place while Knox was registered with Merrill Lynch. 

May 2017. “The Customer alleges misrepresentation and omission of material facts from August 2012 to May 2017.” The case was settled for $300,000. The case was regarding municipal debt and it took place while Knox was registered with Merrill Lynch.

November 2016. “The Customer alleges unauthorized account activity and misrepresentation from August 2016 – September 2016.” The case was settled for $69,344.40. The case was regarding common and preferred stocks and it took place while Knox was registered with Merrill Lynch.

November 2016. “The Customer alleges unauthorized account activity and misrepresentation from August 2016 – September 2016.” The case was settled for $105,947.26. The case was regarding common and preferred stocks and it took place while Knox was registered with Merrill Lynch.

November 2016. “The customer alleges unsuitable investment recommendations, misrepresentation and omission of material facts from 2008-2016.” The case was settled for $1,569,114. The case was regarding annuity losses and it took place while Knox was registered with Merrill Lynch.

October 2016. “The Customer alleges unauthorized account activity and misrepresentation from August 2016 – September 2016.” The case was settled for $85,722.34. The case was regarding common and preferred stocks and it took place while Knox was registered with Merrill Lynch.

October 2016. “The Customer alleges unauthorized account activity and misrepresentation from August 2016 – September 2016.” The case was settled for $146,685.31. The case was regarding common and preferred stocks and it took place while Knox was registered with Merrill Lynch.

October 2016. “The Customer alleges unauthorized account activity and misrepresentation from August 2016 – September 2016.” The case was settled for $69,011.13. The case was regarding common and preferred stocks and it took place while Knox was registered with Merrill Lynch.

October 2016. “The Customer alleges unauthorized account activity and misrepresentation from August 2016 – September 2016.” The case was settled for $69,753.55. The case was regarding common and preferred stocks. 

October 2016. “The Customer alleges unauthorized account activity and misrepresentation from August 2016 – September 2016.” The case was settled for $110,844.36. The case was regarding common and preferred stocks and it took place while Knox was registered with Merrill Lynch.

October 2016. “The Customer alleges unauthorized account activity and misrepresentation from August 2016 – September 2016.” The case was settled for $86,326.34. The case was regarding common and preferred stocks and it took place while Knox was registered with Merrill Lynch.

October 2016. “The Customer alleges unauthorized account activity and misrepresentation from August 2016 – September 2016.” The case was settled for $66,092.05. The case was regarding common and preferred stocks and it took place while Knox was registered with Merrill Lynch.

October 2016. “The Customer alleges unauthorized account activity and misrepresentation from August 2016 – September 2016.” The case was settled for $118,244.76. The case was regarding common and preferred stocks and it took place while Knox was registered with Merrill Lynch.

October 2016. “The Customer alleges unauthorized account activity and misrepresentation from August 2016 – September 2016.” The case was settled for $67,607.80. The case was regarding common and preferred stocks and it took place while Knox was registered with Merrill Lynch.

August 2016. “The Customer alleges unauthorized account activity and misrepresentation from August 2016 – September 2016.” The case was settled for $95,899.91. The case was regarding common and preferred stocks and it took place while Knox was registered with Merrill Lynch.

August 2016. “The Customer alleges misrepresentation from May 2013 to August 2016.” The case was settled for $76,961.10. The case was regarding common and preferred stocks and it took place while Knox was registered with Merrill Lynch.

July 2016. “The Customers allege misrepresentation, unauthorized transactions, unsuitable investment strategy and failure to follow instructions from August 2002 to November 2010.” The customer sought $999,999 in damages and the case was settled for $140,000. The case was regarding common and preferred stocks and it took place while Knox was registered with Merrill Lynch.

May 2016. “The Customers, through their attorney, allege misrepresentation and unsuitable investment recommendations from August 2013 to November 2015.” The customer sought $386,864.96 in damages and the case was settled for $155,000. The case was regarding municipal debt and it took place while Knox was registered with Merrill Lynch.

Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Merrill Lynch may be liable for investment or other losses suffered by Knox’s customers.

Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If you have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.