Home Alts News Massachusetts Regulator Orders North Carolina Broker-Dealer to Pay $400,000 for Agent’s Violations

Massachusetts Regulator Orders North Carolina Broker-Dealer to Pay $400,000 for Agent’s Violations

Massachusetts Secretary of the Commonwealth William Galvin has ordered North Carolina-based broker-dealer Capital Investment Group Inc. to pay full financial restitution to a Massachusetts senior citizen who lost $400,000 investing with one of its agents.

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Massachusetts Secretary of the Commonwealth William Galvin has ordered North Carolina-based broker-dealer Capital Investment Group Inc. to pay full financial restitution to a Massachusetts senior citizen who lost $400,000 investing with one of its agents.

Robert S. Graham, who was registered in Massachusetts, was the former CEO and president of RG Advisory Group of Arizona, a federally registered investment advisor.

Graham allegedly solicited investments in his own private business ventures from his clients at Capital Investment Group without disclosing his actions to his employer.

In addition to other investors, Graham solicited $400,000 in investments in his own personal business venture from the Massachusetts woman, despite the fact that the investments presented a higher risk than the investor had indicated was acceptable. All of the investors’ funds were lost.

When Capital Investment Group learned of Graham’s actions, the firm chose not to terminate his employment, despite the recommendations of the firm’s chief compliance officer, the order said. Instead, it retroactively approved his actions, with the condition that the investors sign agreements to hold the firm harmless. Galvin also claims that the broker-dealer failed to perform due diligence and review the investments before they were approved.

“This is the classic example of a firm shutting its eyes to the violations of their agents who are either big producers or have some type of name recognition within the community,” Galvin said.

In addition to full restitution for the investor, Capital Investment Group was ordered to pay an administrative fine of $50,000 and must conduct a comprehensive review of its policies and procedures.

Graham was censured and permanently barred from registering in Massachusetts and is required to pay an administrative fine of $15,000.

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