Ex-New Hampshire Governor is Suing For Damages
The New Hampshire Bureau of Securities Regulation is looking into allegations brought by the state’s former governor, Craig Benson, who is accusing ex-Merrill Lynch brokers Dermod Cavanaugh and Charles Kenahan of churning his account and causing over $50M in damages that with market adjustments, he claims, is now over $100M. Benson filed a Financial Industry Regulatory Authority (FINRA) arbitration claim against the broker-dealer and the two men.
Merrill Lynch is a Bank of America (BAC) subsidiary. Churning is when a broker makes excessive trades in a customer’s account in order to earn commissions.
Charles Kenahan Named in $40M Broker Fraud Settlement
This is not the first time that Kenahan, once considered a top Merrill Lynch broker, has been accused of churning that led to huge losses.
Last year, Merrill Lynch settled with Cabletrons Systems CEO, Robert Levine, for a record of $40M. Levine accused Kenahan of excessive trading, making unsuitable investment recommendations, and misrepresentations.
Like Benson, he claims the losses he sustained was over $100M. This means that Charles Kenahan has been tied to allegedly over $200M in investor losses. He was fired by Merrill Lynch last year.
Like with Levine’s case, the broker-dealer is trying to argue that Benson, who also co-founded Cabletrons Systems, is a sophisticated trader who not only approved every trade but also would have been aware of transactions in his account. Benson, however, disputes the claim that he is an experienced investor.
According to CNBC, Benson said that he didn’t pay Merrill Lynch $26M so he could day trade his own account. He believes that his account was churned so that the firm and the two brokers could rack up commissions.
Unsuitable Investment Recommendations, Overconcentration Alleged
The former New Hampshire Governor, who suffered damages of over $50M, contends that according to a forensic audit by Securities Litigation and Consulting Group if Merrill had merely placed his money in an S & P 500 Index fund, his money would have earned more than $100M.
Instead, Charles Kenahan allegedly executed thousands of trades in the former governor’s account, including unauthorized transactions in small-cap China stocks, and caused Benson to lose tens of millions of dollars.
Both Benson and Levine claim that the ex-Merrill Lynch broker assured them that their respective funds, collectively totalling $380M, would never be overconcentrated and that commissions would be lower than what was paid to former registered representatives.
According to Kenahan’s BrokerCheck record, an unrelated customer complaint naming him that also alleged unsuitable investment recommendations and excessive trading was settled by the firm for $350K.
Kenahan worked 34 years in the industry where he previously also was a broker for Morgan Stanley, Smith Barney, Bear Stearns, and Thomson McKinnon Securities. As for ex-Merrill Lynch broker Dermod Cavanaugh, he was with the firm from 2007 to 2017. He worked 17 years in the industry. Like Kenahan, he also used to be a Morgan Stanley broker.
Contact Our Stockbroker Fraud Lawyers
If you sustained losses while former Merrill Lynch brokers Charles Kenahan or Dermod Cavanaugh managed your accounts, contact our broker fraud lawyers at Shepherd Smith Edwards and Kantas (SSEK Law Firm) today. We pursue claims against the largest firms on Wall Street to help investors recover their money that was lost due to broker fraud or negligence.