The Massachusetts Securities Division has charged two investment adviser representatives and their firm for allegedly overconcentrating more than 250 client accounts in what it deems as unsuitable energy investments.
James G. Daly and Michael J. O’Keeffe are charged with violating their fiduciary duties to their investors, a majority of whom were Massachusetts residents. The complaint alleges that Daly and O’Keeffe, who formed Oakdale Wealth Management LLP in 2006, chose to invest nearly all of their firm’s clients in high risk energy investments.
“This case is an example of how a one-size-fits-all approach to investors can be harmful,” said William Galvin, secretary of the Commonwealth. “Advisers need to be acting in the best interests of their clients, particularly when their clients are reaching retirement age and cannot afford to take risks with their hard-earned savings.”
The complaint alleges that despite warnings about the potential volatility of the energy sector, Daly, who handled most of the investment advisory business, opted to overconcentrate nearly every client in energy investments, regardless of age, risk tolerance, and net worth. In many cases, more than 30 percent of the client’s portfolio was made up of energy-related investments.
O’Keeffe, who acted as Daly’s compliance officer, is accused of failing to perform any meaningful review of Daly’s actions, though Oakdale’s own policies and procedures stated that it would tailor investment decisions based on each client’s risk tolerance. The regulators claim that this led to significant losses for their clients, including those with low risk tolerance.
“Oakdale clients lost millions of dollars of assets as a result of substantial losses in their energy-based investments. Hard working investors, such as retired police officers, bus drivers, and construction workers, lost a significant portion of their retirement savings,” the complaint states.
The Securities Division is seeking to have Daly and O’Keeffe fined, censured, and to have Daly permanently barred from registration in Massachusetts. The regulators are also asking that the respondents be required to disgorge all profits from the alleged wrongdoing and to provide restitution to Massachusetts investors for their losses.