The Financial Industry Regulatory Authority has barred a former Merrill Lynch broker who was at the center of a $26.25 million settlement with New Hampshire over allegations including unauthorized and excessive trading to the state and the account of the state’s former governor and his family.
Charles E. Kenahan, who also was permanently barred from the securities business in New Hampshire, was sanctioned by Finra after refusing to produce information and documents and to appear for on-the-record testimony as requested by Finra.
The New Hampshire Bureau of Securities Regulation alleged that Merrill Lynch failed to supervise Kenahan, who worked there from December 2007 until his termination in July 2019. The bureau said Kenahan engaged in unauthorized trading, mismarked trade confirmations, inappropriately traded inverse and leveraged products and overcharged commission.
The bureau’s claims stemmed from Gov. Craig Benson allegations that he suffered heavy losses at the hands of the former Boston-based broker who engaged in excessive trading and unsuitable investment recommendations from 2012 until 2017.
Merrill Lynch terminated Kenahan due to “loss of trust and confidence related to the servicing of client accounts.” According to published reports, Benson will receive $24.25 million, while the state will receive $2 million, under the settlement terms.
Finra said it began investigating the case in 2018 after receiving a statement of claim from one set of Kenahan’s customers alleging sales practice violations. It said Kenahan initially cooperated in the investigation, but he ceased doing so this month.
The regulator said it sent two requests to Kenahan: one seeking the production of information and documents; the other seeking the continuation of his testimony. But on January 8, Kenahan acknowledged that he received the requests and will not produce the information and documents requested or appear for on-the-record testimony at any time.
Finra said that Kenahan, without admitting or denying the findings, consented to the sanction and to the entry of findings that he refused to produce information and documents and to appear for on-the-record testimony requested.