A New Hampshire advisor who lost millions in client money he invested in risky, double-leveraged Credit Suisse notes has been ordered to pay almost $6 million by state regulators.
Thomas Chadwick, 54, agreed to settle charges that he mishandled money for his clients, mostly New Hampshire and Vermont residents seeking low-to moderate-risk investments, the New Hampshire State Bureau of Securities Regulation said in a press release.
Chadwick was formerly an investment advisor with the now-defunct registered investment advisor firm Chadwick & D’Amato, which he co-founded.
Chadwick has agreed to pay $4.6 million in restitution to his former clients and has also agreed to pay $1 million in costs and penalties, the bureau said. The bureau, however, said it may need to undertake a separate legal action against Chadwick to recover the money because he indicated he doesn't have the resources to pay the penalties.
Chadwick has also agreed to be permanently barred from securities registration as part of the settlement.
The bureau originally charged Chadwick in August 2023, seeking $11 million in penalties. The bureau said that starting in 2019, the advisor began concentrating up to 90% of his clients’ accounts in double-leveraged “Credit Suisse X-Links Monthly Pay 2xLeveraged Mortgage REIT Exchange Traded Notes,” known as REML.
REML contained warnings that it was not appropriate for ‘buy-and-hold’ investors seeking long-term investments nor those who could not afford the risk of losing their entire investment in REML and was only suitable for highly aggressive investors, the regulator said.
“In March 2020, as the Covid pandemic emerged, the value of REML fell to nearly zero dollars and resulted in devastating losses totaling several million dollars. Dozens of Chadwick’s former clients were affected,” the regulator said.
In May 2022. Vermont charged the former advisor with "impersonated clients using their personal login information for their brokerage accounts,” according to Chadwick’s online Investment Adviser Registration Depository file. The charges are still pending.
The firm Chadwick & D’Amato, which Chadwick founded with partner Anthony D’Amato in 2002, terminated its registration status with the SEC and Vermont in 2021 and has taken down its website. Vermont regulars contend they continued serving clients after the registration was ended.