Merrill Lynch To Pay Former NH Governor $24 Million Over Excessive Trading Allegations
Tyler Durden
Tue, 12/08/2020 – 19:05
Merrill Lynch has been ordered by the state of New Hampshire to pay $26.25 million in fines and restitution to settle allegations that one of its top brokers traded excessively and without authorization in order to rack up huge commissions. The company was also cited for failure to supervise and was ordered to maintain new compliance rules.
Of that $26.25 million, more than $24 million in restitution will go to the former governor of New Hampshire, Craig Benson.
The fine is the “largest monetary sanction in the state’s history and the second largest FINRA settlement in at least a decade,” according to CNBC.
The former broker accused of the wrongdoing, Charles Kenahan, has been barred from the industry. He was found to have “traded without authorization, mismarked trade confirmations, excessively traded stocks and Initial Public Offerings, over charged commissions, and inappropriately traded inverse and leveraged products,” according to NH regulators.
His actions resulted in “high commissions for Merrill Lynch and Kenahan and heavy losses for the investor.”
Jeff Spill, the deputy director and head of enforcement for New Hampshire’s Bureau of Securities Regulation, commented: “This case is about an abuse of trust committed by Merrill Lynch and Kenahan. Ultimately, Kenahan’s recommendations benefited Kenahan and Merrill Lynch and not the investor.”
Kenahan’s FINRA BrokerCheck record offers his take on the allegations, stating:
“…the transactions giving rise to the customers’ allegations were executed at the customers’ direction. The allegations resulted in arbitrations and settlements. I was not a party to the arbitrations; I had no say in the firm’s decision to settle the claims; and I was not asked to make any payment as part of the settlements.”
“I certainly didn’t sign a document and say it’s OK to steal from me. This is a fight I never chose,” Benson had said over the summer, after claiming “widespread misconduct” led to market-adjusted damages of over $100 million.
During the summer, a group of Merrill clients had alleged $200 million in damages which ultimately led to the New Hampshire investigation, CNBC noted in an interview with Craig Benson: