Connect with us

First News in the World

Merrill Lynch pays $40M to Cabletron co-founder after alleged churning

Merrill Lynch pays $40M to Cabletron co-founder after alleged churning


Merrill Lynch pays $40M to Cabletron co-founder after alleged churning

Chris Ratcliffe | Bloomberg | Getty Images

Bank of America Merrill Lynch has paid a hefty $40 million to settle “churning” allegations involving a former broker, according to filings and sources familiar with the case. It’s the largest such settlement in at least a decade.

The recipient of the settlement is Robert Levine, co-founder of one-time network equipment maker Cabletron Systems, according to the sources.

They said the case went to a final hearing in front of an arbitration panel before Merrill decided to settle. A second complaint also seeking about $40 million in damages and involving the same broker is pending.

The advisor involved is Charles Kenahan, according to FINRA’s BrokerCheck. The complaint was filed in March 2018 for allegations of “unsuitable investment recommendations, excessive trading and misrepresentation from February 2012 until December 2017.” This practice is commonly called churning.

Kenahan, who started working at Merrill Lynch in Boston in 2007, was dismissed by the firm last week, according to the BrokerCheck report.

FINRA arbitration is not a public forum and is used as an alternative to litigation or mediation in order to resolve a dispute. In this case, Merrill Lynch decided to settle after the final hearing. Kenahan and Levine could not immediately be located for comment.

A second complaint

FINRA’s BrokerCheck system data indicates that the settlement is the largest involving an individual claimant out of over 29,000 in the last decade, according to Craig McCann, the founder and principal of Securities Litigation and Consulting Group.

Kenahan has two pending arbitration claims listed on his BrokerCheck report, including one that has more than $42 million in alleged damages listed.

That complaint was brought by Craig Benson, the former governor of New Hampshire and co-founder of Cabletron with Levine, according to sources familiar with the case. Benson alleges Kenahan made similar churning violations, a FINRA public disclosure says. That arbitration case was filed with FINRA in February 2018 and is pending.

Benson declined to comment to CNBC. FINRA did not respond to a request for comment, while a spokesman for Bank of America Merrill Lynch declined to comment. The once-public Cabletron, a competitor to Cisco, had annual revenues at one point of more than $1 billion. It was sold in 1998 to a private company.

Source link

Continue Reading
You may also like...
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *


To Top
error: Content is protected !!