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Millis investment firm owners charged with mismanaging clients' money

BY Zachary Comeau

3/21/2019

The owners of a Millis wealth management firm have been charged by Massachusetts Secretary of the Commonwealth William Galvin with gambling away clients’ money on risky investments.
James G. Daly of Franklin and Michael J. O’Keefe of Millis are charged via an administrative complaint with violating their fiduciary duties to their investors.
The complaint, filed Wednesday, alleges the two men invested nearly all of their clients’ money in high-risk investments like oil and natural gas. 
“This case is an example of how a one-size-fits-all approach to investors can be harmful,” Galvin said in a statement. “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.” 
Despite warnings about the potential volatility of the energy sector, Daly opted to concentrate nearly every client in that field regardless of age, risk tolerance and net work, according to the complaint.
In many cases, more than 30 percent of the client’s portfolio was made up of energy-related investments, Galvin alleges. 
O’Keefe, acting as Daly’s compliance officer, failed to perform any meaningful review of those actions. The firm’s own policy was to tailor investment decisions based on each client’s risk tolerance.
The complaint alleges the firm’s clients lost millions of dollars of assets as a result of 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.
One such case included a 74-year-old retiree whose terminally ill husband set up an account with the firm to ensure the family’s financial safety net after his death. 
The Securities Division is seeking to have the two men fined, censured and to have Daly barred from registration in the state. The division is asking the respondents be required to disgorge all profits from the alleged wrongdoing and to provide restitution to Massachusetts investors for their losses.