December 9, 2021
A top-ranked Merrill Lynch broker in Louisville, Kentucky, who was sidelined last week amid a firm review of his outside activities has found a new home at independent broker-dealer Sanctuary Wealth.
Charles Thomas “Todd” Mercer Jr., a 27-year industry veteran who had led an eight-person team at Merrill, registered with Sanctuary Wealth, an indie firm founded three years ago by former Merrill managers, on Wednesday.
“I’ve known Todd for nearly a decade, from the time I was his hiring manager at Merrill Lynch,” Sanctuary CEO Jim Dickson said in a statement. “Todd is an outstanding leader in this industry, and we are excited about his contributions to Sanctuary Wealth in the years to come.”
Mercer, whose team was said to have produced $5.7 million in revenue, did not return a request for comment left at his new firm.
His exit came after Merrill placed him on administrative leave while the firm investigated whether he had potentially run afoul of brokerage industry rules prohibiting unapproved outside business activities or private securities transactions, sources said previously.
Mercer in mid-October was named as a defendant in an adversarial claim in a bankruptcy case filed by a defunct manufacturer of cannabidiol (CBD) in Kentucky who alleged that a group of potential investors had pulled $2.6 million in funds at the last minute and fraudulently diverted them to a competitor, according to a complaint filed in U.S. Bankruptcy Court in the Eastern District of Kentucky.
Mercer, who allegedly contributed $100,000, also helped to negotiate a $2.5 million investment from another individual and also referred a client, according to the complaint.
Mercer’s lawyer, Jan West of Goldberg Simpson LLC in Prospect, Kentucky, said they have filed a motion to dismiss the broker from the lawsuit because he was “never an investor” in any of the companies as alleged in the claim.
“[T]here are no legitimate legal grounds for Mr. Mercer to be named as a defendant,” West said in an emailed statement.
West said she is not representing Mercer in any negotiations with Merrill. As of Thursday, his BrokerCheck record did not yet reflect his departure from the wirehouse, which has 30 days to file a Form U5.
A spokeswoman for Sanctuary did not immediately return an additional request for comment on how it evaluated the potential outside activity or whether the team, which was called the Mercer Wealth Management Group and included at least two other advisors, would be joining.
As of Thursday, registration records for other member of the Mercer Group, which Forbes ranked #14 in the state with around $800 million in assets this year, still reflected their employment with Merrill.
“The team is still here and functioning,” said a Mercer team member who answered the phone at their Merrill office on Wednesday afternoon. The person declined to comment further.
Sanctuary, which was founded in 2018, serves brokers managing roughly $18.5 billion in assets, according to a recent announcement. It has grown in large part by aggressively targeting wirehouse brokers and pitching them on having more freedom and flexibility in running their business as independent brokers.
A Merrill spokesperson declined to comment.
While big firms have become increasingly sensitive to the regulatory and headline risk associated with policy violations, regional and independent firms have been willing to give a pass to behavior from larger producers that may have crossed compliance lines but did not appear to have malicious intent, lawyers and recruiters have said.
“The major wirehouses have very strong compliance now,” said Kevin T. Hoffman, a lawyer at an eponymous firm in Connecticut who was not familiar with Mercer’s situation. “There are a lot of rules, and they may not have the same amount of rules at smaller firms.”