← Broker database 2025-04-15
Manuel Melendez Barred for Borrowing from Customers and Misusing Funds
According to FINRA, Manuel Francisco Melendez of San Juan, Puerto Rico was barred from association with any FINRA member in all capacities for borrowing from customers without firm approval, misusing customer funds, and failing to disclose outside business activities.
Melendez borrowed a total of $738,000 from two customers through four separate loans without providing notice to or obtaining approval from his firm. The first customer, a senior, loaned him $300,000 purportedly for a billboard advertising business. Melendez has not repaid any principal or interest to this customer.
The second customer provided $438,000 through three loans, supposedly for an ice cream business and a sign business. Melendez has not repaid these loans either.
Beyond borrowing improperly, Melendez misused the loan proceeds. He used thousands of dollars from the senior customer's loan for personal expenses including cruises, airline tickets, and retail purchases—none of which were authorized. He used the second customer's loan proceeds for his separate billboard business rather than the stated purposes.
Melendez falsely attested on compliance questionnaires that he had not received loans from firm clients, and he failed to timely disclose his outside business activities to his firm. When he eventually disclosed some activities, he falsely stated that no firm customer was involved.
The firm settled claims by the customers arising from this conduct.
FINRA rules generally prohibit borrowing from customers except in limited circumstances requiring firm approval. These rules protect customers from being pressured by their brokers and ensure proper oversight of potential conflicts.
Investors should be extremely cautious if a broker asks to borrow money. Such requests should be reported to the broker's firm and may warrant a FINRA complaint.