FINRA Targets Ex-Merrill Lynch Advisor Ali Chehab for Unauthorized Trading

FINRA Targets Ex-Merrill Lynch Advisor Ali Chehab for Unauthorized Trading

Financial Advisor Complaints / By /

Merrill Lynch, one of the most recognized names in American finance, has become the focus of industry scrutiny due to allegations against a former advisor, Ali Chehab. Based in Portland, Oregon, Chehab stands accused of serious violations by the Financial Industry Regulatory Authority (FINRA), a regulatory body responsible for overseeing broker-dealers and safeguarding investors in the U.S.

This development is a stark reminder that, in the financial services industry, even large, established firms are not immune from internal misconduct. As Warren Buffett famously observed, “It takes 20 years to build a reputation and five minutes to ruin it”—a sentiment especially relevant in light of this case, given its implications for clients and the broader market.

The Case at Hand

The allegations against Ali Chehab are detailed in FINRA complaint No. 2024082633901. The investigation focuses on a period from January 2023 through December 2024, during which time Chehab was registered with Merrill Lynch and previously, with Equitable Advisors.

According to regulatory sources, the following infractions have been alleged:

  • Executing unauthorized trades in client accounts
  • Using clients’ login credentials to access accounts without explicit permission
  • Conducting business through personal email channels, violating firm policy and compliance standards
  • Engaging in so-called “selling away” activities, meaning sales of investments not approved nor supervised by Merrill Lynch

Perhaps most concerning, when approached by FINRA with a formal request for information, Chehab allegedly refused to cooperate, reportedly stating: “I’m not going to provide that information and I do not care if I get barred.” This refusal itself is a violation of a central regulatory requirement for industry professionals.

Professional Background and History

Chehab has a relatively short history in the financial services sector, having started his career at Equitable Advisors in 2022 before moving to Merrill Lynch in 2023. According to his FINRA CRD# 7625979 record, several customer disputes have marked his tenure:

Year Firm Complaint/Action Amount/Status
2024 Merrill Lynch Customer Dispute – Settled $42,783.93
2024 Merrill Lynch Customer Dispute – Settled $319,415.23
2024 Merrill Lynch Termination –

Industry experts note that while disputes and settlements are not uncommon, multiple significant settlements within a short period raise red flags about an advisor’s practices.

The Regulatory Framework: Accountability in Focus

FINRA imposes stringent rules to promote transparency and integrity. Among them:

  • FINRA Rule 8210: Mandates that members and associated persons must cooperate fully with regulatory investigations.
  • FINRA Rule 3240: Explicitly prohibits unauthorized trading and improper use of client accounts or information.

These rules are foundational to investor trust. According to Investopedia, unauthorized trading is a leading type of financial advisor misconduct and represents a threat not only to individual clients but also to the overall reputation of the financial industry.

Financial Fact:

According to FINRA statistics, unauthorized trading complaints account for approximately 12% of all reported broker misconduct cases each year. Furthermore, recent research suggests that Americans lose over $3 billion annually to investment fraud and unqualified advice, much of which involves trusted advisors who breach their fiduciary duty.

Investment Fraud and Bad Advice: A Broader Perspective

While every case is unique, the issues highlighted in the Chehab investigation are, unfortunately, not isolated. According to the Financial Advisor Complaints resource, advisor-related fraud, unauthorized trading, unsuitable recommendations, and breaches of confidentiality have all become increasingly common subjects of regulatory enforcement and client arbitration.

Notably, FINRA’s investor insights discuss how common red flags in fraud cases include:

  • Unusually complex products sold without proper disclosure
  • Commingling of client funds with advisor funds
  • Outsized promises of low risk and high returns
  • Failure to provide account access or statements

This underscores the importance of vigilance, due diligence, and regular communication with your advisor and their firm.

Consequences and Learning Points for Investors

The outcome of the Chehab case is still pending, but regulatory actions in similar cases have included:

  • Permanently barring the advisor from the securities industry
  • Imposing significant monetary penalties
  • Requiring restitution to harmed clients
  • Severe damage to the advisor’s professional reputation and standing

For investors, there are key takeaways to help avoid becoming a victim of fraud or negligence:

  • Monitor your accounts regularly: Check statements and trade confirmations for unauthorized activity.
  • Protect your login credentials: Never share online or phone access information with anyone, including your advisor.
  • Verify transactions and communications: Confirm all trades and changes directly with your firm, not just your advisor.
  • Review advisor background: Use FINRA BrokerCheck to research your advisor’s credentials, history, and any disciplinary actions.
  • Insist on written correspondence through official firm channels: Personal emails and off-the-record conversations can be a sign of trouble.

A Final Word on Accountability and Vigilance

This recent action involving Ali Chehab and Merrill Lynch offers a practical lesson: even within well-known firms, lapses in integrity and compliance can occur. Whether you are a seasoned investor or just starting to build your portfolio, your best defense is proactive engagement. Read your statements, ask questions, and don’t hesitate to escalate concerns if anything appears unusual or unauthorized.

Stay aware, informed, and always protect your interests—after all, as history shows, investment fraud is an ongoing issue that can impact anyone. For additional resources, reviews, and regulatory filings regarding financial advisors, visit the Financial Advisor Complaints Database.

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