Carnahan issues cease and desist order against Springfield investment adviser
January 12, 2011 by Wes Johnson
by Wes Johnson • News-Leader • January 11, 2011
Missouri Secretary of State Robin Carnahan today announced a cease and desist order has been issued against a Springfield investment adviser for allegedly misleading his clients into purchasing equity indexed annuities.
According to the order, the adviser, Tracy W. Mitchell, used free lunch investment seminars to promote himself as a financial planner offering financial advice – mostly to senior citizens.
Mitchell allegedly recommended and sold only insurance products, specifically equity-indexed annuities, without disclosing conflicts such as the large commissions he stood to gain on the sales.
According to the order, Mitchell conducted six free lunch seminars from October 2008 to July 2009, and recommended an equity indexed annuity to all but one of the 32 attendees he subsequently met.
“Unfortunately, these free lunch seminars continue to be popular in Missouri, so investors should remember that there is no such thing as a free lunch,” Carnahan said.
“My office will continue to go after anyone who targets elderly Missourians only to offer inappropriate investment advice.”
Reached at his Springfield office, Mitchell said he planned to remain in business, but referred further comment to his St. Louis attorney.
The attorney had not returned a News-Leader inquiry by late this morning.
Carnahan said that as a registered investment adviser representative in Missouri, Mitchell was required to put his clients’ interests first and to disclose any conflicts.
Instead, his investors were allegedly harmed by being sold products which tied up their money for long periods of time, when other cheaper, less-restrictive products would have better served their investment goals.
The order also alleges that Mitchell committed securities fraud by failing to disclose material information to investors and by providing untrue information to investors.
Mitchell and one of the companies he’s doing business through, Guidepost Financial Limited Liability Company, face more than $70,000 in penalties and costs.
In addition, officials in Carnahan’s office are seeking to take action on Mitchell’s investment adviser representative license, which may involve a suspension or revocation.
Mitchell and Guidepost Financial have 30 days to request a hearing and contest this matter.
For more information regarding investments and fraud protection, or for information regarding a company or representative, visit the Secretary of State’s online Investor Protection Center at http://www.MissouriSafeSavings.com or call the toll free Investor Protection Hotline at 1-800-721-7996.
The full cease-and-desist order against Mitchell is online at http://www.sos.mo.gov/securities/orders/AP-10-45.asp