Merrill’s PBIG Hires Wife of Broker Fired for Excessive Trading
Merrill Lynch’s PBIG unit for wealthy investors has hired the wife of a broker who was fired by J.P. Morgan Securities in September for “unacceptable” trading in the accounts of an elderly client, a high-profile incident highlighted in two articles in The New York Times last year.
Jacqueline Rahn worked alongside her husband, Trevor Rahn, at four firms throughout their two-decade-long careers and left J.P. Morgan a day after her husband, according to their BrokerCheck histories. She joined the Los Angeles office of Merrill’s Private Banking and Investment Group office in early December.
Her hire is heartening some lawyers, brokers and recruiters who complain that brokerage firms have become over-cautious in their sensitivity to compliance and reputational issues and who also applaud its significance for women’s career autonomy. Others say it raises questions about whether firms have seriously changed their recruiting philosophies.
“Wall Street firms will hire Bonnie and Clyde if their BrokerChecks are relatively clean and they have a book of business that will generate fees and commissions,” said Lloyd Schwed a lawyer in Palm Beach Gardens, Florida, who has represented both broker-dealers and advisors but cautioned that he is not familiar with the Rahns. “Things have changed in recent years, but unless there is a proven history of fraud or abuse, firms still give them a pass.”
Rahn, who began her career as a sales assistant at Merrill in New York in 1996 under her maiden name Benderski, did not have a “client-facing” role over the couple’s careers at Morgan Stanley, Deutsche Bank Securities and J.P. Morgan and has been conjugally estranged from Trevor for years, according to several sources.
“We are excited to have hired Jackie Rahn as a private wealth advisor given her longstanding experience servicing clients in the market,” a Merrill spokeswoman said. She declined to elaborate on the firm’s considerations of her past experience or her success in attracting former customers.
Trevor Rahn was producing about $2 million of revenue at J.P. Morgan, according to two sources, each of whom spoke on condition of anonymity.
Reached at her PBIG office, Rahn referred calls to her compliance office, which did not respond.
“I’m sure Merrill took a hard look before they hired her, and they must have been satisfied that she was clean enough and that Trevor was the real bad actor,” said Jack Duval, managing partner of Accelerant, an expert witness firm in New York. “Usually those PBIG guys have pristine records.”
Trevor Rahn did not respond to an emailed request for comment. J.P. Morgan discharged him on Sept. 17, 2018, citing “unacceptable practices” regarding the “timing and size” of closed-end fund orders in a customer’s account and his characterization of the many trades in the account as “unsolicited.” The bank in June reached an almost $65,000 settlement with the customer and has since identified $1.1 million of additional unauthorized fund and REIT trades in the account, according to his BrokerCheck Report. Resolution of the newly discovered activities is listed as a “pending” event.
Both Trevor and Jacqueline’s regulatory histories list the $65,000 settlement, but it is the sole disclosure on her record. “The New York Times” in August identified the customer who received the settlement as Gordon Dewart, a then-89-year-old New Yorker who had recently moved to an assisted living facility. His daughter Tracey had alerted J.P. Morgan to suspicious activities in her father’s account after reviewing statements and trade confirmations, the paper said.
Ms. Dewart told AdvisorHub she has concerns that brokers who have a history of misconduct often remain employed in the advisory industry or get easily hired if they are let go, but added that she was not inclined to blame Jacqueline for her family’s account problems.
“I do not know her or the specifics of her case, but in general a wife should not be held responsible for the actions of her husband,” she said, “unless, of course, she was involved.”
A J.P. Morgan spokeswoman declined to comment on the Rahns’ departures, on its retention of their clients or on Jacqueline’s role in her husband’s former practice.
The Rahns moved to J.P. Morgan in July 2010, after a two-and-a-half year stint at Deutsche Bank Securities in Los Angeles. The German bank won an arbitration award of $722,460 plus interest from Trevor Rahn over a promissory note tied to his hiring bonus. He has not paid the award, which included over $205,000 in attorneys’ fees and costs, and DB Bank is listed as a lienholder against him on his BrokerCheck report.
A DeutscheBank spokesman declined to comment.
Jacqueline began her brokerage career at Merrill in 1996, four years after Trevor initiated his career there.
Merrill won a restraining order against them when they left their New York “Grand Central complex” branch in 1999 to join Morgan Stanley in Beverly Hills. The order temporarily prevented them from soliciting their former customers, according to a court filing.
At the time, Jacqueline was listed under her maiden name and described as a sales assistant. She obtained her Series 7 license concurrent with her hiring at Merrill, got a managed futures fund license in 2004 and, like Trevor Rahn, passed Finra’s new “securities industry essentials examination” in September 2018, according to their BrokerCheck histories.