Massachusetts charges adviser with concealing information in marijuana deals

Frederick V. McDonald, Jr. allegedly failed to disclose risks and his own conflicts

Apr 17, 2019 @ 2:02 pm

By InvestmentNews

Massachusetts securities regulators have charged a state-licensed investment adviser representative with various forms of misconduct in an investment scheme involving medical marijuana ventures.

(More:Advisers struggle with the highs and lows of marijuana investing)

The state charged that Frederick V. McDonald, Jr., CEO of the Beverly, Massachusetts-based investment adviser US Advisory Group Inc., failed to disclose key risk factors, withheld information about his own conflicting interests and concealed crucial information from more than 100 investors in order to fund various medical marijuana ventures, though no licenses were ever acquired in Massachusetts and no dispensary was ever opened.

Regulators said that Mr. McDonald funded several of his ventures through one high-net-worth client, who has lost more than $3 million. Collectively, investors have lost control of more than $8 million in assets, while seeing no returns on their investments, according to an administrative complaint filed by the commonwealth's securities division today.

Frederick V. McDonald, Jr., CEO of the Beverly-based investment adviser US Advisory Group Inc., and his partners planned to open a medical marijuana dispensary in Revere, Mass. A lack of transparency and communication led to funding issues, regulators said in a release. Mr. McDonald and his partners jointly raised money for the venture, but when the partners began to dispute existing agreements, the relationship collapsed, and they subsequently failed to obtain a lease or license, according to the complaint.

(More:BlackRock invests in pot stock)

Regulators are seeking a censure, an order permanently barring Mr. McDonald and USAG from registration in the state, disgorgement of profits, a requirement that the respondents make offers of rescission and provide restitution to compensate investors for the alleged wrongdoing, and an administrative fine.

0
Comments

What do you think?

View comments

Most watched

Events

Finding your edge from Tony Robbins

Guru Tony Robbins has helped a lot of people, but armed with his psychology Financial Advisor Josh Nelson has helped his practice soar.

Events

Finding innovation in your firm

Adam Holt of AssetMap explains how advisers understand they need to grow, but great innovation may be lurking right under your nose.

Latest news & opinion

The growth of factor-based investing

Advisers are making decisions about clients' portfolios by using the same characteristics that govern factor-based ETFs.

Finra makes its list to target hundreds of rogue individuals

The regulator sees patterns in the behavior and disclosures of high-risk brokers.

LTC insurer offering co-pays to blunt soaring premium increases

John Hancock policyholders would get a discount on their premium in return for agreeing to pay a bigger portion of their claims in the future.

Goldman Sachs acquires United Capital

After a payday of $75 million or more, CEO Joe Duran plans to join Goldman in a senior position.

Private equity loves IBDs, but will that last?

Three big acquisitions in less than a year signals renewed life in the formerly beleaguered industry.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print