Schwab accused of failing to prevent expired advisor from collecting fees
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- Patrick O’Connell collected fees on the accounts of Schwab’s clients for years after his registration expired, according to the Massachusetts Securities Division.
- Schwab took no action to monitor customer accounts for other payments to O’Connell, the complaint says.
- Galvin says he brought a lawsuit to protect investors from the dishonest practices of Schwab and O’Connell.
Charles Schwab was indicted on Wednesday by Massachusetts securities regulator William Galvin with unethical and deceptive practices that allowed a third-party investment adviser to continue to charge advisory fees on the accounts Schwab customers for years after their registration expires.
According to an administrative complaint filed by the Massachusetts Securities Division, James Patrick O’Connell of Gloucester, a former representative of an investment adviser, has collected at least $ 125,000 in investment advisory fees since his last listing expired in 2014.
O’Connell’s alleged illegal activities were discovered during an investigation into a complaint against O’Connell for exploitation of the elderly.
Schwab removed O’Connell from its platform in 2012 for letting its registration expire for almost two years, which also resulted in a reprimand from the securities division.
Despite this deletion, Schwab took no action to monitor accounts receivable for additional payments to O’Connell, who collected at least $ 46,000 in investment fees on Schwab brokerage accounts over a longer period. six years while remaining unregistered, ”the complaint says.
O’Connell continued to make referrals to clients and collect fees on their accounts, including inappropriate referrals.
According to the complaint, O’Connell made broad recommendations without regard to individual client needs and over-focused portfolios in global communications infrastructure companies.