Investor to Merrill Lynch: It's Not 'OK to Steal from Me'

"I certainly didn't sign a document and say it's OK to steal from me. This is a fight I never chose ... Both Bob and I caught Merrill Lynch with our wallets in their hands."

-- The former governor of New Hampshire, Craig Benson, to CNBC. 

In the past, we've chronicled shenanigans of brokers behaving badly in working with investors around the world. In our previous coverage of news related to misdeeds by broker-dealers, Bank of America's Merrill Lynch subsidiary was ordered by regulators to pay more than $7.2 million in restitution and interest to investors who bought mutual funds from the wirehouse. 

Another case in point is more recent news that Merrill Lynch is being investigated over "customer complaints of alleged misconduct that resulted in staggering losses," according to an in-depth report by CNBC.   

In fact, "multiple" sources have confirmed to the business news service that Merrill is trying to work out a settlement with New Hampshire's Bureau of Securities Regulation regarding allegations that at least one former broker churned client accounts to produce millions of dollars in extra commission revenue.

Such negotiations came on the heels of former New Hampshire governor Craig Benson filing a more than $100 million claim against Merrill Lynch and two of its brokers at the time, Charles Ernest Kenahan and Dermod Cavanaugh, the news agency points out. 

CNBC's reporters were alerted when a report on Kenahan showed up in the Financial Industry Regulatory Authority's BrokerCheck database. Known by its acronym, FINRA is a self-regulatory organization (SRO) made up of the very member firms it regulates. It's overseen by the Securities and Exchange Commission and serves as the primary regulator for broker-dealers. 

Benson has filed his FINRA arbitration claim against Merrill Lynch alleging that he lost more than $50 million and suffered market-adjusted damages of $100 million-plus. In total, CNBC estimates some $200 million in potential claims against the brokerage in this latest round of client complaints. 

"I certainly didn't sign a document and say it's OK to steal from me," Benson told the cable news service. "This is a fight I never chose ... Both Bob and I caught Merrill Lynch with our wallets in their hands."

Benson was referring to his longtime friend and business partner, Robert Levine. As reported by CNBC, he received "a record $40 million payout from Merrill Lynch" after the firm decided to settle allegations of "unsuitable investment recommendations, excessive trading and misrepresentation brought by Levine through a FINRA arbitration complaint."

The former New Hampshire governor's complaint includes charges that Kenahan made unsuitable investments, engaged in unauthorized trading and excessive trading in his account from December 2007 to February 2018. He has been fired by Merrill Lynch, reports InvestmentNews, a fact that probably comes as little relief to those who lost money in their dealings with one of the brokerage's former representatives. 

To put it bluntly, too many investors and their families just don't realize how stark of a difference there is between the transactional world of broker-dealers and the way a financial advisor operates. 

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