Massachusetts Secretary of the Commonwealth, William Francis Galvin, filed complaints against three investment advisers in three separate investment fraud cases. The cases involved breach of fiduciary duty, the unregistered sale of securities, false statements, and misrepresentations and omissions.
Daniel A. McKenna was charged, along with his investment adviser firm (Principle Profits Asset Management), with selling more than $1 million dollars in "worthless Principle Profits stock" to – and entering into borrowing agreements with – various clients over the course of 17 years. The State claimed McKenna’s actions constituted a gross conflict of interest and violated his fiduciary duty to the clients. The Complaint asks that "fair compensation" be paid to defrauded investors.
John B. Wilson was charged with selling unregistered securities in JBW Capital, LLC to approximately 25 investors. According to the Complaint, Wilson was not a registered investment adviser. The State accused Wilson of misrepresenting and omitting material facts about JBW Capital, LLC (a pooled investment vehicle, which purportedly used automatic trading software to trade on the Chicago Mercantile Exchange) in order to "hide investment losses and to induce further investments." The Complaint asks for disgorgement of profits, restitution, and that Wilson be banned from the industry for life.
Sean Michael O’Brien and his firm, Andover Equity Investment Group LLC, were charged with fraudulently offering, selling, and purchasing securities. In particular, Andover Equity was accused of charging "exorbitant fees" to clients and of using certain client funds to pay O’Brien’s personal expenses. Andover Equity and O’Brien also were accused of interfering with a Securities Division investigation by making false statements and refusing to provide requested information. The Complaint asks for disgorgement of profits, restitution to investors, and the revocation of both Andover Equity’s and O’Brien’s licenses as registered investment advisers.
"These cases are indicative of the swift and decisive action my securities division will take when we uncover investment advisers who have violated the securities laws," Secretary Galvin toldInvestmentNews.