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Three Investment Advisers Charged with Massachusetts Securities Fraud

Massachusetts securities regulators have filed three actions accusing investment advisers of defrauding investors of millions. The cases come as the state is getting ready to oversee even more investment advisers in 2012.

One of the securities fraud actions filed is against unregistered adviser John B. Wilson, who regulators want to ban from the securities industry for life. Wilson is accused of defrauding 25 investors who gave him over $1.5M. The funds were placed in JBW Capital LLC.

Wilson lost over 90% of the funds in 2 trades he made during one month in ’08. He has admitted to having a trading addiction.

In the second Massachusetts securities case, RIA Daniel A. McKenna allegedly raised over $1M from investors over a 17-year period. He did this by selling shares in Principle Profits Asset Management. In fact, the shares were worthless. He also allegedly persuaded investors to lend his company money, which he never paid back.

Meantime, state regulators are accusing another RIA, Sean Michael O’Brien and Andover Equity Investment Group LLC of using clients’ money to pay for his own expenses, charging “exorbitant” fees, and issuing untrue statements to investigators. For example, he allegedly told the state that TD Ameritrade Holding Corp. division “thinkorswim,” which was his custodian broker-dealer, never asked him about his advisory fees. (His management fee was 15.54% even though the average for the industry is .5%-2%.) However, it turns out that TD Ameritrade asked O’Brien about the fees and eventually terminated his use of the company’s platform.

The state wants investors to get their money back. Regulators also want to take back the registrations of both O’Brien and McKenna.

Currently, there are 739 RIA’s under Massachusetts’ watch. Per the Dodd-Frank Wall Street Reform and Consumer Protection Act, which mandates that midsize investment advisers go from federal to state supervision next year, another 200 more RIA’s will fall under the state’s watch. (Midsize advisers have assets ranging from $25M and $100M).

Referring to these latest securities actions, Massachusetts Secretary of the Commonwealth William Galvin said that they show the state’s willingness to go after investment advisers that have violated securities laws.

Our stockbroker fraud lawyers represent investors throughout the US. If you believe that a registered investment adviser or broker-dealer may have defrauded you, please contact our securities fraud law firm. You may have a Massachusetts securities claim on your hands.

Over the years, Shepherd Smith Edwards and Kantas LTD LLP has helped thousands of investors throughout the US to recoup their investment. Your first consultation with us is free.

Massachusetts Signals Strict Oversight Of Investment Advisers, The Wall Street Journal, December 14, 2011
Massachusetts charges three advisers with varying flavors of fraud, Investment News, December 18, 2011

More Blog Posts:
Colorado Securities Fraud: Universal Consulting Resources LLC and Owner Richard Dalton to Pay $15.8M to Settle SEC Lawsuit Over Ponzi Scam, Stockbroker Fraud Blog, December 9, 2011
LPL Financial Ordered to Pay $100K for Lack of Adequate Oversight that Resulted in Unsuitable Investments for Clients, Stockbroker Fraud Blog, November 29, 2011
Texas Securities Fraud: Unregistered Adviser Confesses to Selling Almost $400K in Promissory Notes and Investments Despite Cease and Desist Order, Stockbroker Fraud Blog, December 5, 2011
Working with a securities fraud law firm increases your chances of recovery. It also alleviates the stress of trying to navigate the arbitration and/or court system on your own.

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