Massachusetts Regulator Charges Two Firms Employing “Rogue” Brokers Who Swindled Elderly

Massachusetts’ securities regulator charged two broker-dealers last month for hiring “rogue” advisors who misused the funds of elderly clients.

It’s the first case in which the Massachusetts Secretary of the Commonwealth has gone after firms for employing brokers who engaged in fraudulent or unethical activity.

The two advisors were charged, as well.

The complaint against the first advisor can be read here.

Details of the conduct, from Financial Advisor IQ:

The unnamed rep allegedly over-concentrated funds of an elderly client in risky investments and proceeded to churn the account. According to the complaint, Kajouras took over the account when the rep left the firm and ended up putting the bulk of the client’s funds into a firm that eventually went bankrupt.

During the sweep that started in June, Spartan told Galvin’s office that it had brought on 60 reps with prior disciplinary records in the previous two years, but only put six of them under extra supervision, according to the complaint. The regulator is seeking to bar both the broker and the firm from doing business in Massachusetts and collect a fine and restitution.

The complaint against the second advisor can be read here.

Details of his conduct, from Financial Advisor IQ:

The second complaint targets Revere Securities and Jonathan Altman and also involves an elderly client whose account was churned.

Altman’s disciplinary record includes complaints of excessive trading and unsuitable or unauthorized transactions, but the broker was able to stay in the business by jumping from firm to firm, according to the complaint. Revere, meanwhile, said it continues to hire reps with disciplinary records. Galvin’s office is seeking to bar Altman but is only calling for a cease-and-desist order and an independent compliance review against the firm, as well as fines, disgorgement and restitution from both.

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