(December 30, 2010) -– Missouri Secretary of State Robin Carnahan has announced that James McClellan, Jr., of Chesterfield, Mo., has been permanently barred from working in the securities industry after he sold more than $4 million worth of unregistered real estate investments to Missouri residents. Carnahan also announced sanctions against McClellan’s former employer, Huntleigh Securities Corporation, censuring the firm and requiring it to pay $100,000 for failing to supervise the agent, who sold securities “off the books.”
According to two consent orders, McClellan sold unregistered securities to 18 Missouri investors in the St. Louis area, six of whom were over 80 years old. McClellan got the group to invest more than $4.4 million in Meadow Ridge, a timeshare resort property in Egg Harbor, Wisc., while he was employed at Wachovia and Huntleigh Securities. He did not disclose to the investors that the resort was experiencing financial difficulty or that the investments were not being offered through his employer.
According to the consent order, McClellan, who is the managing member and CEO of Meadow Ridge, sold the timeshare investments to 11 Missouri residents from April 2002 to April 2003 while he worked for Wachovia, and to 12 Missouri residents from April 2003 to April 2008 while he was employed by Huntleigh.
“It is unacceptable for financial professionals to misuse their clients’ trust. My office made sure that this broker won’t be able to work in the industry in Missouri again and that his employer knows how to better supervise its employees,” Carnahan said. “Before choosing how to invest your hard-earned savings, always remember to call our Investor Protection Hotline to make sure the investment is properly registered.”
McClellan is barred from registering as a securities agent in Missouri. Huntleigh will be censured, and is required to pay at least $100,000 to the Missouri Investor Education and Protection Fund and more than $20,000 for the Securities Division’s costs. Further, Huntleigh is required to hire an independent compliance consultant to review its supervisory policies and procedures and to adopt and implement the consultant’s recommendations.
Huntleigh’s failure to supervise McClellan and other deficient compliance procedures were discovered during a November 2009 for-cause, on-site audit of the firm led by the Securities Division’s Audit Unit. Carnahan’s Audit Unit conducted a record 73 audits of licensed firms in 2009. Through the end of November, the unit had already opened 77 audits in 2010, setting a new record for audits in a single year. The Division’s investigation into the activities of former Huntleigh agents and principals is on-going.
For more information regarding investments and fraud protection in Missouri, or for information regarding a company or representative, call the toll free Investor Protection Hotline at 1-800-721-7996, or visit the Secretary of State’s online Investor Protection Center at www.MissouriSafeSavings.com.
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