Former Financial Advisor Michael Magruder Barred by FINRA

• July 29, 2025
• Merrill Lynch

Michael Magruder (CRD#: 4579211) was a previously registered broker and investment advisor.

Broker’s History

He entered the securities industry in 2003 and previously worked with Morgan Keegan & Company, Inc.; Raymond James & Associates, Inc; Wells Fargo Advisors, LLC; and Merrill Lynch, Pierce, Fenner & Smith Incorporated.

Current and Past Allegations of Conduct Leading to Investment Loss

According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in June 2025,  without admitting or denying the findings, Magruder consented to the sanction and to the entry of findings that he failed to provide information and documents requested by FINRA in connection with its investigation into whether he had obtained loans from customers without notice to, or approval from, his member firms. The findings stated that FINRA requested documents and information material to its investigation, such as financial account statements. Initially, Magruder submitted an incomplete response that did not substantially comply with FINRA’s request. Ultimately, Magruder failed to produce the complete information or documents requested. As a result, Magruder consented to the imposition of the following sanctions:

• A bar from associating with any FINRA member in all capacities.

For a copy of the FINRA Disciplinary Action Details, click here.

In addition, Michael Magruder has been the subject of seven other FINRA Disclosures, including:

• June 2025—“Former client alleges FA convinced him to lend FA money and exercised discretion in former client’s account to sell securities to fund loan.” The damage amount requested is $686,552.00 and the customer dispute is still pending.
• May 2025—“ Claimant alleges he loaned money to FA and FA failed to repay it.” The damage amount requested is $150,000.00 and the customer dispute is still pending.
• January 2025—“ Respondent Magruder failed to comply with an arbitration award or settlement agreement or to satisfactorily respond to a FINRA request to provide information concerning the status of compliance. Pursuant to Article VI, Section 3 of FINRA By-Laws, and FINRA Rule 9554, Respondent Magruder is suspended on January 31, 2025 for failure to comply with an arbitration award or settlement agreement or to satisfactorily respond to a FINRA request to provide information concerning the status of compliance.” For a copy of the Arbitration details, click here.
• October 2024—“ Respondent Magruder failed to comply with an arbitration award or settlement agreement or to satisfactorily respond to a FINRA request to provide information concerning the status of compliance. Pursuant to Article VI, Section 3 of FINRA By-Laws, and FINRA Rule 9554, Respondent Magruder is suspended on October 24, 2024 for failure to comply with an arbitration award or settlement agreement or to satisfactorily respond to a FINRA request to provide information concerning the status of compliance.” For a copy of the Arbitration details, click here.
• July 2024—“ Customer alleges FA asked for a loan and failed to follow the client’s instructions not to sell a specific stock in the customer’s account.” The customer dispute settled for $30,000.00.
• July 2024—Discharged by Raymond James & Associates, Inc., “Individual alleged to have failed to follow firm procedures with respect to receipt of loans from customers, and failed to comply with firm policies requiring updates to registration Form U4.”
• July 2024—“ Client alleges he made a personal loan to FA at FA’s request.” The damage amount requested was $175,000.00 and the customer dispute settled for $189,259.57.

For a copy of Michael Magruder’s FINRA BrokerCheck, click here.

We Help Investors Recover Investment Losses

Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.

Reasonable basis suitability requires that a recommended investment or investment strategy be suitable or appropriate for at least some investors. Reasonable basis suitability requires an advisor to conduct adequate due diligence so that he or she can determine the risks and rewards of the investment or investment strategy.

Customer-specific suitability requires that a member or associated person have a reasonable basis to believe that the recommendation is suitable for a particular customer based on that customer’s investment profile. Among the criteria that a financial advisor must evaluate to satisfy his or her customer-specific suitability obligations include the investor’s age, tax status, time horizon, liquidity needs, and risk tolerance; a client’s other investments, financial situation and needs, investment objectives, and any other information disclosed by the customer should also be considered.

Excessive trading often occurs when a Financial Advisor puts his or her interests ahead of the clients and makes transactions solely for the purpose of generating commissions. Financial Advisors have a regulatory duty to recommend suitable investment strategies. One of the components of the suitability analysis is quantitative suitability.

Quantitative suitability requires a brokerage firm or financial advisor with actual or de facto control over a customer’s account to have a reasonable basis for believing that a series of recommended transactions – even if suitable when viewed in isolation – is not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile. No single test defines excessive activity, but factors such as the turnover rate, the cost-equity ratio, and the use of in-and-out trading in a customer’s account may provide a basis for a finding that a member or associated person has violated the quantitative suitability obligation. Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.

The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at (800) 931-8452 or by email at mwolper@wolperlawfirm.com.