The SEC has barred Nicholas Rowe, a former New Hampshire advisor, from the securities industry for life. This decision follows another lifetime ban handed down by the state in a case involving a series of risky investments and insufficient disclosures.
The commission reached a settlement with Rowe, who ran an RIA practice in Bedford, N.H., prohibiting from associating with any broker, advisor, transfer agent or national rating organization.
Rowe could not be reached for comment, and his attorney did not immediately respond to an inquiry about whether his client has any intention to seek reinstatement to the industry.
The case stems from his use of inverse and leveraged ETFs for clients, who, regulators determined, were unaware of the risks involved in these investments. Moreover, the products were unsuitable for some of his clients, some of whom were elderly widows. New Hampshire authorities initiated its enforcement action against Rowe and his firm, Focus Capital Wealth Management, in August 2012. In total, losses from the bad bets topped $2 million.
Rowe was registered with the SEC through 2012, when he switched over to a state registration. New Hampshire's investigation dates back to fall 2011, however, and the state went on to issue a fine and bar Rowe and his firm from holding a securities license.
"This may seem like piling on by the SEC, but the regulators increasingly work together to stop wrongdoers from regulatory forum shopping," writes Cipperman Compliance Services, which circulated a note on the matter. Cipperman’s note suggests that the SEC and states have been coordinating their enforcement activities to ensure that bad actors don't slip through the cracks.
The action might be unusual, but not a complete surprise. Duane Thompson, senior policy analyst at the fiduciary training firm fi360, points out that in a case like Rowe's, the SEC and New Hampshire both have jurisdiction, regardless of his registration status.
"I haven't seen anything like this before, but I would expect that there's a sound rationale behind it, and not simply piling on," Thompson says. "Both the feds and the states have authority over fraud and deceit activities of investment advisors, whether registered with the SEC, a state or not at all."
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