Articles Posted in Failure to Supervise

Today, the Securities Exchange Commission (SEC) issued an order finding that Jon Merriman, founder of San Francisco brokerage firm Merriman Curhan Ford, and Christopher Aguilar, the firm’s former general counsel, had failed to supervise broker David “Scott” Cacchione who was engaging in securities fraud.

Although the firm had placed Cacchione on heightened supervision because of prior disciplinary actions, the SEC found that the firm ignored red flags signaling potential fraud, including an elderly investor’s complaint that Cacchione purchased risky penny stocks without her permission. According to the SEC, Cacchione committed securities fraud by placing unauthorized and unsuitable trades in customer accounts and also by helping an accomplice obtain more than $45 million in personal loans using securities held in the accounts of unsuspecting customers as collateral for the loans. After pleading guilty to securities fraud, Cacchione was sentenced to five years in prison and ordered to pay restitution of $47.5 million.

Without admitting or denying any wrongdoing, the three parties agreed to pay the following fines associated with their failure to supervise Cacchione: Merriman Curhan Ford $100,000; Jon Merriman $75,000; and Christopher Aguilar $40,000. In addition, Merriman and Aguilar agreed to a 12-month suspension from serving in any supervisory capacity.

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