On May 17, 2012, the Securities Division of Massachusetts ordered H. Beck to guarantee the recovery of $1 million for an 82 year old woman, with early stage Alzheimer, who was convinced to cash in CDs and buy annuities by one of their brokers. In addition H. Beck was fined $90,000. A copy of the order can be viewed here.
The broker, Paul Dumouchel, who earned over $63,000 in commissions for his acts, convinced the elderly lady to purchase annuities which could not be accessed without a penalty for ten years. In addition, over $5,000 in penalties was incurred for cashing in the CDs.
In his testimony Dumouchel acknowledged that:
"at the investors age, it was not the easiest thing in the world to find suitable investments because many companies would not sell an annuity to someone over 80 years of age..."
We have warned in the past that there are unscrupulous brokers who will take advantage of the elderly. All firms, including H.Beck have a duty to oversee and supervise their brokers to prevent such abuse.
The investigation found that H. Beck failed to supervise its broker allowing the broker to shift her nest egg to wholly inappropriate investments. In addition to a cease and desist order, the administrative fine and the compensation of the elderly lady victim, the order requires H. Beck to:
- Retain an independent consultant review and monitor their supervisory policies and procedures, including their inspection procedures for a period of two years
- H. Beck shall not have authority to terminate the consultant with approval of the Massachusetts Division of Securities
- Contact all of Dumochel's clients to determine if there are other victims and to compensate any other victims
H. Beck, Inc. is the securities arm of The Capital Financial Group and is an independently operating subsidiary of Securian Financial Group, Inc.
Brokers have a duty to make recommendations that are suitable for the investor. If you have suffered losses on investments that you feel are unsuitable for you or that you do not understand, you may be able to recover those losses through FINRA arbitration. We have been helping investors recover stock market losses for more than 20 years. Call us at 561 391 1900.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.