BROWSE BY TOPIC
Stories of Interest
- SEC Charges Additional Defendant in Fraudulent ICO Scheme
- Warren Buffett Simply Blew it on Wells Fargo Stock: Dick Bove (Video)
- Barclays and Deutsche Bank to Lag U.S. Trading Peers
- NY AG Schneiderman Seeks to Close Loophole That Could Let Trump Pardons Block State Charges
- 'Fearless Girl' is Moving to NYSE After Year Staring Down 'Charging Bull'
- What's In Your Wallet - American Express Shares Soar After Earnings Release
- Deutsche Bank's Executive Departures Continue Following Change in CEO
- Reflections of an Economist Commissioner (SEC's Piwowar)
- Billionaire HF Manager and The Fed Chair Runner-Up are Investing in New Cryptocurrency
- Court Finds 2 Brokers Liable for Fraud Involving Mortgage-Backed Securities
- One FINRA: An Organization’s Commitment to Diversity and Inclusion
- 2018 GASB Accounting Support Fee to Fund the Governmental Accounting Standards Board
- Barclays Eyes Move Into Cryptocurrency Trading
- Goldman Breaks From Wall Street Pack with Bond-Trading Boom
- Janney Montgomery Scott CEO Joins FINRA Board of Governors
- SEC Encourages Investors to Do Background Checks on Investor.gov
- The Martin Act: Wall Street Titan Takes Aim at Law That Tripped Him Up
- Bank of America’s Cost-Cutting Drive Pushes Profit to Record
- Larry Fink: Wall Street’s $6 Trillion Man Finally Worth $1Bn
- Activist Investor Wants Barclays Investment Banking Overhaul (Video)
We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.
Stay Informed with the latest fanancialish news.
NEWSLETTERS & ALERTS
CT Advisor and Principal Caught Breaching Fiduciary Obligations
by Howard Haykin
The SEC charged Westport Capital Markets and Christopher McClure with breaching their fiduciary duties and defrauding advisory clients, including by repeatedly purchasing securities that generated significant amounts of undisclosed compensation.
WESTPORT CAPITAL MARKETS, LLC. Westport Capital Markets is a Westport,CT-based dually registered investment adviser (RIA) and broker-dealer (B/D). The firm has been a FINRA member since 1996 and an SEC-registered advisor since 1997. According to FINRA BrokerCheck, the firm also does business as … Gilman Hill Asset Management, Fava Wealth Management, Whitfield Retirement Services, and Whitfield Wealth Management.
CHRISTOPHER MCCLURE. McClure has 25 years’ experience with 5 firms. Prior to joining Westport in 2001, McClure had been associated with Prudential Securities (1997-2001), Merrill Lynch (1995-1997), Smith Barney (1993-1995), and Lehman Brothers (1992-1993). Since 2007, McClure has been the sole or majority owner of Westport and has served as the firm’s President, CEO, CFO, FinOp and CCO. He holds the Series 7, 24, 27 and 53 Licenses.
SEC FINDINGS. Westport and McClure, while serving as investment advisers, violated their fiduciary duty and defrauded their clients. Westport and McClure obtained standing authority to make investment decisions in client accounts, and misused that authority when they repeatedly purchased securities in client accounts that generated undisclosed mark-ups and fees for themselves – on top of the advisory fees that these clients already paid Westport to manage their investments. All told, Westport’s advisory client accounts incurred undisclosed mark-ups and fees of approximately $780,000 and market losses (on risky and sometimes unsuitable investments) in excess of $1 million.
MARK-UPS ON PROP TRADES. From March 2012 until June 2015, Westport and McClure received undisclosed mark-ups when Westport, acting as principal, sold securities from its proprietary brokerage account to client accounts.
Federal law requires RIAs to obtain client consent - prior to the completion of each transaction - when selling securities from an adviser’s own account to a client. To enable clients to provide informed consent, Westport was required to provide clients with sufficient information for clients to make an informed decision. Westport was thus required - but failed - to disclose its financial conflict of interest to clients. Clients were deprived of key information they needed to evaluate Westport’s and McClure’s financial motives in buying these risky securities in their accounts.
MUTUAL FUND PURCHASES. Further, in its capacity as a broker-dealer, Westport accepted mutual fund distribution fees – i.e., 12b-1 fees - when Westport and McClure invested advisory clients in certain mutual fund share classes. Westport and McClure did not tell their advisory clients that the clients’ mutual fund investments generated this additional form of compensation for Westport and McClure. In some instances, Westport and McClure invested their clients in mutual fund share classes that charged a 12b-1 fee even when a share class of the same fund was available without a 12b-1 fee.
The SEC seeks disgorgement of ill-gotten monetary gains plus interest and penalties, among other things.
[Click for further details: SEC Complaint]