New Hampshire on Monday said it had fined Merrill Lynch $2 million, with the wirehouse agreeing to pay $24.3 million back to clients as part of a settlement over an ex-broker's excessive trades, commissions and transactions, commonly referred to as churning in the securities industry.
In a statement, the New Hampshire Bureau of Securities Regulation called the settlement a "record" and the "largest monetary sanction" in the regulator's history.
The broker at the heart of the settlement is Charles Kenahan, who was "discharged" or fired by Merrill Lynch in July 2019 over the alleged churning, according to his BrokerCheck profile. He had worked for Merrill Lynch for 12 years in Boston. According to a report from CNBC over this summer, Kenahan worked with wealthy clients that included Craig Benson, who was governor of New Hampshire from 2003 to 2005.
In its settlement, the regulator cited Merrill Lynch for "failing to supervise Kenahan and that Kenahan traded without authorization, mismarked trade confirmations, excessively traded stocks and initial public offerings, over charged commissions, and inappropriately traded inverse and leveraged products."
One security that Kenahan heavily traded was Monitise, a United Kingdom-based fintech company that reported losses and was acquired by Fiserv in 2017.
"On several occasions, [Kenahan] recommended the purchase and sale of stock in Monitise, a security not followed by Merrill Lynch research, which trades also resulted in losses for [an investor]; the trade tickets for the purchases were mismarked as unsolicited when they were solicited," according to the settlement.
Kenahan "repeated this conduct regarding Monitise across multiple customer accounts including the customers that complained about" him, according to the settlement. "Those sales violated [Merrill Lynch's] internal policy not to recommend a security not followed by [Merrill Lynch] research."
"The misconduct led to high commissions for Merrill Lynch and Kenahan and heavy losses for the investor," according to the regulator.
A spokesperson from Merrill Lynch said the firm had "enhanced our policies and monitoring systems over the last several years to more closely monitor certain types of client account activity."
Kenahan could not be reached for comment.
On his BrokerCheck report, he responded to client allegations of churning by stating that the trades that resulted in clients' complaints "were executed at the customers' direction." He was also barred from the securities industry in the state.
According to New Hampshire, Merrill Lynch "was ordered to maintain compliance undertakings specifically put in place to address the compliance failures uncovered by the Bureau's investigation" as part of the settlement.
RBC Wealth Management's latest move in New York adds an elite eight-member team to its recently opened Westchester office.
Stifel – so far - is on the hook for more than $166 million in damages, legal fees and settlements in investor complaints involving Roberts, a 35-year industry veteran.
The giant alt investments platform's latest financing led by T. Rowe Price and SurgoCap Partners, along with State Street, UBS, and BNY, will fuel additional growth on multiple fronts.
Some investors recently have seen million dollar plus decisions by FINRA arbitration panels involving complex products decisions go their way.
New report shines a light on how Americans view wealth today.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
