One year after filing a complaint against an agent at Janney Montgomery Scott for pushing short-term trades for certain mutual funds that harmed investors, Massachusetts Commonwealth Secretary William Galvin fined the firm more than $286,000 and demanded the company pay almost $164,000 in restitution to investors who were affected.
Last May, Galvin’s office filed a complaint against Stephen Querzoli, an advisor in Danvers, Mass. According to the complaint, Querzoli would entice his clients to invest in Class A shares of mutual funds. While these types of funds tend to result in earnings for investors over a period of three to five years, Querzoli would buy and sell them over a matter of months, dropping the earnings into purchasing even more expensive mutual funds (and pocketing nearly $200,000 in fees and about $78,776 in commissions during a six-year period as a result, according to the complaint).
Galvin’s office stated that Janney failed to supervise Querzoli even after it had opened its own inquiry three years after the agent first began conducting inappropriate sales. According to Galvin’s complaint, the firm’s branch manager suggested that Querzoli purchase lower-cost shares in appropriate circumstances, and the investigation closed in 2016. He was later fired in November 2018.
Galvin also mandated that Janney Montgomery Scott must “conduct a full review of its policies and procedures relating to the short-term trading of Class A shares of mutual funds to ensure compliance” with Massachusetts state law, as well as federal law.