By Attorney Courtney Werning
In an administrative case filed by the Massachusetts Securities Division on October 26, 2015, Fidelity Brokerage Services LLC (Fidelity) is accused of knowingly allowing unregistered investment advisors to make trades in Fidelity customer accounts over the last ten years. In an astounding apparent lack of oversight, Fidelity allegedly willfully ignored, and evidently encouraged, unregistered activity that has left investors and its own customers at risk.
From 2005 to 2015, over twenty trading authorizations submitted to Fidelity allegedly indicated that a particular individual, who was unregistered, was their “financial advisor.” The Division alleged that this person’s unregistered activity was so blatant that Fidelity instructed him to register on three separate occasions, but continued to allow him to advise Fidelity customers. The Division stated in its complaint that more than $700,000 was paid in advisors fees to this unregistered adviser for managing over $9 million in assets over these ten years. Unbelievably, Fidelity allegedly highly valued this person’s business and provided him gifts, such as free trades, airline miles, and tickets to sporting events.
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The Division categorizes this person’s example as “emblematic of a systematic failure to detect and prevent unregistered activity.” In response to the Division’s investigation, in July 2014, Fidelity began reviewing the problem and identified 93 additional unregistered advisers having more than 15 trading authorizations over customers.
According to the Division, Fidelity’s conduct clearly constitutes dishonest and unethical behavior. If you or someone you know has invested with an unregistered investment advisor or believe that your adviser may have lacked the appropriate registration, our securities lawyers offer free case evaluations so you can discuss your legal options. Call Meyer Wilson today.
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