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Westport Capital Markets, LLC Financial Advisor Christopher McClure Accused of Excessive Markups and Fees in Client Investment Accounts

Posted on Saturday, March 16th, 2019 at 11:08 am    

Westport Capital Markets

Erez Law is currently investigating Westport Capital Markets, LLC financial advisor Christopher McClure (CRD# 2289844) regarding excess fees. McClure has been registered with Westport Capital Markets, LLC in Westport, Connecticut since 2001.

In November 2017, The Securities and Exchange Commission (SEC) alleged that McClure and Westport Capital Markets, LLC violated their fiduciary duty and defrauded their clients. The SEC alleged that Westport and McClure obtained standing authority to make investment decisions in client accounts, and misused that authority when they repeatedly purchased securities in client accounts that generated undisclosed mark-ups and fees for themselves. “The undisclosed mark-ups and fees that Westport and McClure generated for themselves were on top of the advisory fees that these clients already paid Westport to manage their investments. The securities that generated undisclosed mark-ups for Westport and McClure were risky and caused substantial losses for clients, including for at least one client who had told McClure to invest his accounts conservatively. Across Westport’s advisory client accounts, the undisclosed mark-ups and fees totaled approximately $780,000. From March 2012 until June 2015, Westport and McClure received undisclosed mark-ups when Westport, acting as principal, sold securities from its proprietary brokerage account to client accounts. Federal law requires investment advisers to obtain client consent – prior to the completion of each transaction – when selling securities from an adviser’s own account to a client. To enable clients to provide informed consent, Westport was required to provide clients with sufficient information for clients to make an informed decision. Westport was thus required – but failed – to disclose its financial conflict of interest to clients. Clients were deprived of key information they needed to evaluate Westport’s and McClure’s financial motives in buying these risky securities in their accounts. Further, in its capacity as a broker-dealer, Westport accepted mutual fund distribution fees, known as 12b-1 fees, when Westport and McClure invested advisory clients in certain mutual fund share classes. Westport and McClure did not tell their advisory clients that the clients’ mutual fund investments generated this additional form of compensation for Westport and McClure. In some instances, Westport and McClure invested their clients in mutual fund share classes that charged a 12b-1 fee even when a share class of the same fund was available without a 12b-1 fee. Through the conduct alleged herein, Westport and McClure breached the fiduciary duty that they owed to their investment advisory clients, by defrauding those clients, failing to make investment decisions in the best interest of those clients, and failing to disclose their conflicts of interest.”

McClure has been the subject of two customer complaints between 2013 and 2018, according to his CRD report. One recent complaint is regarding:

January 2018. “Former customer dissatisfied with investment strategy. Alleges negligence, breach of contract, breach of fiduciary duty, omissions and misrepresentations.” The customer sought $300,000 in damages and the case was settled for $137,000.

Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Westport Capital Markets, LLC may be liable for investment or other losses suffered by McClure’s customers.

Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.