New Hampshire Investment Loss Recovery Attorneys
Malecki Law’s investment loss recovery attorneys warn that New Hampshire retirees and investors should be on alert for Ponzi schemers and fraudsters, who are always lurking. Securities fraud can happen to anyone, even knowledgeable investors. It may be surprising, however, to learn that such wrongdoers often go undetected and only succeed in their crimes by finding legitimate cover within the financial institutions that investors most trust. Financial firms have a duty to supervise their employees, even for outside business activities conducted away from their workplace. Ponzi schemers often turn out to be financial advisors at brokerage or investment advisory firms who are selling fake investments away from the accounts at their firm. Meanwhile, trusting investors of the firm are led to believe that the firm is dutifully watching over – this is not always the case. In the Granite State alone, the New Hampshire Bureau of Securities Regulation has taken substantial and repeated enforcement actions against some of the largest and most trusted financial firms, like Merrill Lynch and LPL Financial, for housing “rogue” financial advisers that these firms failed to supervise.
In December 2020, for example, the New Hampshire Bureau of Securities assessed $26 million in monetary sanctions against Merrill Lynch, which is the largest monetary fine the regulator’s history. The sanction was for Merrill Lynch’s failure to supervise the conduct of its former financial advisor, Charles E. Kenahan, who was also barred from the industry, for essentially stealing from customer accounts through excessive trading fees, otherwise known as account “churning.” Merrill Lynch was also found to have benefitted from the high fees, while the affected investors were said to have suffered losses of approximately $200 million.
Despite one of the referenced investors being considered “knowledgeable” about investing, it was immaterial to the New Hampshire regulator, who stated that he and other investors had “entrusted Merrill Lynch and Kenahan” to make proper investment recommendations. While defense lawyers frequently try to shift away blame from the firm by playing up the “sophistication” of the investor, regulators, as well as experienced plaintiff and investment loss recovery law firms, know that sophistication is not even a word mentioned in the majority of the stated and federal securities statutes. I.e., Every investor is intended to benefit from the protection of securities laws, and all investors are entitled to transparency when dealing with financial firms and their advisors.
The Securities and Exchange Commission (SEC) has long been clear that customers of large brokerage firms are legally entitled to expect that their life savings will be protected from fraud and that their accounts will be carefully monitored:
“Customers dealing with a securities firm expect, and are entitled to receive, proper treatment and to be protected against fraud and other misconduct, and may properly rely on the firm to provide this protection. Large securities firms generally have established fairly elaborate systems of supervision and internal control, in recognition of customer reliance on the existence of protective safeguards and of the fact that it is to be anticipated that in a large organization some employees may be tempted to engage in improper conduct.”
In the Matter of Reynolds & Col., SEC Broker-Dealer Proceedings, 39 S.E.C. 902, 916 (May 25, 1960).
Safe to say, even the largest financial firms are not immune to negligently providing refuge to Ponzi schemers and fraudsters seeking a legitimate platform to steal.
While large firms like Merrill are required to pay millions of dollars in fines, it is clear, through the continuing nature of these supervisory failures, that they are nothing more than the equivalent of “speeding tickets” to these firms who meanwhile have full knowledge that they are taking in massive wrongful profits yet fail to return a penny until their hand is finally forced by a regulator. Malecki Law is a national investment loss recovery law firm that has recovered tens of millions of dollars for investors from large financial firms, including Merrill. Hiring the right investment loss recovery lawyer is the first step in recouping investment funds lost to negligent firm supervision. If you are a New Hampshire resident who has lost money in the markets and would like a free consultation about whether your account was improperly supervised, contact the investment loss recovery attorneys at Malecki Law.