Meyer Wilson is investigating potential unauthorized trading claims against
former broker Jeffrey T. Kluge (CRD# 2187964).
Kluge’s broker career consists of a single 25-year registration with
Merrill Lynch. He was suspended as a broker in April 2017 by the Financial
Industry Regulatory Authority, or FINRA, for allegedly failing to respond
to a FINRA request for information.
Kluge recently pleaded guilty to two counts of felony bank fraud in a federal
criminal proceeding. He was accused of running a scheme that resulted
in $8.7 million in losses for two Minnesota commercial banks.
The scheme began in 2001, when Kluge fraudulently obtained a line of credit
from Alliance Bank. As collateral, he pledged certain shares in municipal
bond funds that were already pledged for loans Kluge had obtained from
Merrill Lynch. Kluge used falsified account statements to substantiate
these bond holdings to Alliance Bank.
Kluge ran a similar scheme in 2007 against Platinum Bank. This time, Kluge
submitted falsified account statements to the bank using a phony email
address and a fabricated Merrill Lynch employee identity.
The federal plea agreement requires Kluge to pay nearly $8.7 million in
restitution, $250,000 in fines, and to serve up to six and a half years
In November 2016, Kluge was the subject of two civil actions in a Minnesota
state court brought by plaintiffs raising claims of fraud, breach of contract,
and claim and delivery. He was also subject to two preliminary attachment
orders linked to allegations of intentional fraud and improper disposition
According to Kluge’s FINRA BrokerCheck Report, Kluge faced his first
reported customer dispute in April 2009. The customer took issue with
Kluge’s sale of an auction rate security made just before the market
for such securities suffered unprecedented illiquidity. This dispute was
resolved when Kluge’s firm repurchased the securities at issue at
a cost of over $2.1 million.
More recently, Kluge was implicated in five customer disputes filed in
November 2016 that accused him of unauthorized trading conducted in October
2016. All five of these unauthorized trading disputes were resolved in
December 2016 for over $40,000 each.
Unauthorized trading can leave investors bearing financial risks they never
intended to accept. Those risks can result in losses for the investor.
For non-discretionary accounts, brokers are required to first get the
investor’s authorization before making any trades on their portfolio.
Unfortunately, not all brokers follow that rule. The opportunity to make
a commission on the trade may be too much temptation for some less scrupulous brokers.
Investors who’ve lost money to unauthorized trading are in a position
to hold the broker responsible for that loss. Claims of unauthorized trading
are typically handled through FINRA arbitration.
If you suspect you may be the victim of unauthorized trading, contact Meyer
Wilson for a free consultation. Our attorneys have helped hundreds of
clients recover millions of dollars lost to investment fraud. Call us
at our toll-free number, or
fill out our online request form.