Broker-Dealer ordered to recover $1M+ in annuities sold to elderly widow
May 21, 2012 by Thomas Grillo
Boston Business Journal by Thomas Grillo, Real Estate Editor
Date: Thursday, May 17, 2012, 1:39pm EDT
Real Estate Editor- Boston Business Journal
H. Beck, a Maryland-based broker-dealer, has been ordered by the Massachusetts Secretary of State to refund more than $1 million in annuities improperly sold to an elderly widow by one of its representatives.
The order, issued by the state’s Securities Division, also imposes a $90,000 fine on H. Beck for failure to supervise Paul J. Dumouchel of Wellesley, who was a registered representative of the firm from February 2009 through November 2011, according to Secretary of the State William F. Galvin.
“While this agent was persuading an 82-year-old woman diagnosed with early stages of Alzheimer’s disease to take more than $1 million from bank certificates of deposits and invest them in annuities from which she could not access her money without penalty for at least a decade… no one from H. Beck was supervising him and making themselves aware of his outside activities,” Galvin said in a statement.
The order described Dumouchel’s relationship with the elderly investor whom he met through a mail solicitation in 2010, Galvin said. He drove the woman to area banks so she could withdraw certificates of deposit, incurring penalties of almost $5,000, according to investigators. In less than a one-month period of time, she purchased over $1 million worth of annuities at Dumouchel’s recommendation, the order stated. Dumouchel’s commissions for these transactions were $63,118.
Thursday’s order directs H. Beck to compensate the investor for the early withdrawal penalties plus 6 percent interest. The company is also required to have an independent consultant review their supervisory policies, and to review all of Dumouchel’s clients to determine if any other seniors had purchased an annuity from him.