CFP Board has issued a permanent bar against a former advisor in New Hampshire who reportedly lost clients millions by placing them in complex investments that were unsuitable for them.
Thomas Chadwick, who resides in New London, New Hampshire, is among 10 individuals on a list of public sanctions that the board revealed last week.
In January, CFP Board Enforcement Counsel sent Chadwick a complaint referring to a December stipulation and consent order he had entered into with the Vermont Department of Financial Regulation, which found that he’d placed clients “in an unsuitable, complex, leveraged securities product.”
Those investments, which were made “without properly evaluating each client’s risk tolerance, age, employment status, financial situation, financial needs and investment goals,” ultimately lost those clients more than $3.4 million, according to CFP Board.
According to a report by Valley News, Chadwick had taken money entrusted to him by clients – including many elderly retirees on fixed incomes – and invested it in a leveraged investment product, REML, whose returns were tied to the commercial real estate market.
When the Covid-19 pandemic hammered the real estate investment space, REML shares collapsed to near zero, and his clients’ investments were caught up in the carnage, Valley News explained. Many of the clients impacted were reportedly not aware they had allocations to the high-risk investment.
The news outlet said an investigation by state financial regulators in Vermont found Chadwick “did not fully understand the risks associated with REML.” He reportedly touted it as “a low to moderate risk investment” and “a good product for steady monthly income that could help meet monthly income needs.”
The stipulation and consent order also held that Chadwick used his clients’ credentials dishonestly in order to gain access to their investment accounts.
Due to his mishandling of investments and other reported ethical breaches, Chadwick has been permanently barred from obtaining a securities license in Vermont and ordered to pay impacted clients more than $1.6 million in restitution.
CFP Board said Chadwick did not file an answer to its complaint against him, which goes against its procedural rules.
Considering the gravity, scope, and harm caused by his conduct, CFP Board’s enforcement counsel recommended a permanent prohibition against Chadwick, effectively preventing him from applying for or obtaining the CFP mark.
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