Darryl Cohen Barred After Misappropriation Allegations, $9.4M Damages

Darryl Cohen (Darryl Matthew Cohen CRD# 2786613) is a former registered broker and investment advisor whose last known employer was Morgan Stanley (CRD#:149777) of Westlake Village, CA. His previous employers were Wells Fargo Advisors, LLC (CRD#:19616), also of Westlake Village, and Merrill Lynch, Pierce, Fenner & Smith Incorporated (CRD#:7691) of New York, NY. He has been in the industry since 1997.

After a spate of customer disputes with similar allegations, Morgan Stanley terminated Cohen’s employment on 3/9/21. The reason was due to “Allegations relating to the representative’s facilitation of outside client business and transactions not disclosed to or approved by Morgan Stanley and use of an unapproved platform to engage in inappropriate communications with clients.”

Five customer disputes filed from 6/2/2020 to 10/1/2021 indicated a similar pattern of unsuitable recommendations from Cohen that included the use of a loan or line of credit called the Liquidity Access Line. The first claim from 2020 was settled for a total of $125,000, with allegations that Cohen requested the client use the Liquidity Access line to loan funds for outside business activities.

The other four disputes are still pending, and include similar allegations of the Liquidity Access line, as well as money moved out of their accounts. Two involve using the line of credit for real estate and life insurance policies in which they no longer hold interest. The total requested damages of these claims is $9,400,000.00.

FINRA began its own investigation into the allegations of potential conversion and misappropriation of funds by Cohen. Many of his clients who filed complaints were professional athletes, both current and former, and complained of mismanagement and selling away through third-party loans. The agency requested documents from Cohen as part of the investigation. Initially, Cohen cooperated but did not provide all the documentation FINRA staff requested. FINRA’s Extended Hearing Panel convened on 12/3/2021, and rendered its decision to permanently bar Cohen, effective February 16, 2022.

Cohen has other previous disclosures, with one filed by a customer on 4/5/2010, alleging that an “unauthorized journal transfer” was made to another one of his customers. The client requested damages of $10,000, and the claim was settled for $16,500.

The earliest customer dispute in Cohen’s CRD was filed on 11/5/2001, while employed with Merrill Lynch. The clients alleged unsuitable and unauthorized trading in their account. The client’s requested damages were $90,000, and the claim was settled for $81,851.00. The National Association of Securities Dealers (NASD) conducted the arbitration and was the predecessor to FINRA.

Two other disputes were denied and closed without action.

Did You Invest With Darryl Cohen?

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