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FINRA Disciplinary Action Against Anil K. Chaturvedi

In January 2014, FINRA announced that Anil K. Chaturvedi, previously employed by Merrill Lynch, Pierce, Fenner & Smith Inc., submitted a Letter of Acceptance, Waiver and Consent in which he was fined $60,000 and suspended from association with any FINRA member in any capacity for 18 months.

Without admitting or denying the findings, Chaturvedi consented to the described sanctions and to the entry of findings that he established a trust fund for a customer with her nephew as the account’s beneficiary. The findings stated that several years after the customer’s death, Chaturvedi learned that the nephew had actually funded the account to shield his money from U.S. tax liability. Chaturvedi did not report this information to anyone until a later date because he was concerned the information would trigger an Internal Revenue Service (IRS) investigation of the nephew and himself. After the nephew filed a complaint with Chaturvedi’s firm, Chaturvedi reported the matter to the IRS but never reported the information to his firm.

The findings also stated that there were numerous suspicious transfers of money totaling approximately $8 million between unrelated accounts belonging to Chaturvedi’s clients and from the clients’ accounts to third parties. Chaturvedi was aware of the transfers and although the transfers raised “red flags” of potentially suspicious activity, he failed to inquire further or report the suspicious activities to his firm. Most of the transactions involved $100,000 or less, and some involved $50,000 or less.

The findings also included that Chaturvedi failed to implement his firm’s Anti-Money Laundering (AML) policies by failing to investigate red flags of potentially suspicious activity. Chaturvedi failed to conduct additional due diligence or raise concerns to his supervisor as mandated under the firm’s AML procedures. There were also suspicious, cryptic emails between Chaturvedi and his clients relating to some of the transfers. The wire transfers raised red flags that should have caused Chaturvedi to conduct an additional inquiry and report potentially suspicious activity to his firm. Many of the transfers were from a firm account belonging to one particular customer and were executed pursuant to Letters of Authorization (LOAs) the customer gave Chaturvedi signed in blank, and Chaturvedi filled in the terms of the transfers at the time of the transfer. FINRA found that this matter came to light following a complaint filed with his firm.

Chaturvedi’s firm also found signed but otherwise blank LOAs for another customer, and standing LOAs for transfers of funds where the signature had been cut out of another document and pasted in. The firm also discovered monthly account statements for a trust account and other customers’ accounts that had the liabilities sections covered over by a blank piece of paper. As a result, Chaturvedi created and submitted falsified documents to the firm, causing the firm to create and maintain inaccurate books and records in violation of Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-3.

It was unclear from FINRA’s announcement whether customers had initiated FINRA arbitrations or any other type of securities arbitrations. If you believe that you have suffered losses as a result of Anil Chaturvedi’s misconduct, you may contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL 33324. By phone: 954.693.7577 or 800.718.1422.