The Secretary of the Commonwealth of Massachusetts, William F. Galvin, has sent subpoenas to 15 Wall Street brokerage firms seeking information regarding sales of alternative investments to elderly investors. Mr. Galvin expressed that he “fears elderly people are being targeted for high-risk, alternative investment products.” He further stated that alternative products, such as REITs, oil and gas partnerships, structured products, hedge funds, and tenants-in-common offerings are “accidents waiting to happen when they are sold to inexperienced investors by untrained agents who push the products to score the large commissions associated with alternative investments.” Hopefully, Mr. Galvin’s regulatory investigation uncovers stockbroker misconduct and investment fraud before too many elderly victims lose their retirement savings.
The subpoenaed brokerage firms are: Morgan Stanley, Merrill Lynch, UBS, Fidelity, Charles Schwab, Wells Fargo, TD Ameritrade, ING Financial Partners, LPL Financial, Commonwealth Financial Network, MML Investor Services, Investors Capital Corp., Signator Investors, Meyers Associates, and WFG Investments.
Massachusetts securities regulators appears to be among the more active state securities regulators in the United States. In the recent past, Massachusetts cited a number of brokerage firms for alleged improper sales of non-traded REITs. In May 2013, Massachusetts regulators settled REIT cases with Ameriprise Financial Services, Commonwealth Financial Network, Lincoln Financial Advisors, Royal Alliance Associates, and Securities America for a total of $6.1 million in restitution to investors and $975,000 in fines.
In another regulatory matter, in February 2013, LPL Financial paid $2 million in restitution and $500,000 in fines to settle Massachusetts regulatory charges related to the sale of non-traded REITs.
