SEC Charges Westport Capital Markets, Christopher McClure With Fraud

Westport Capital Markets president and CEO, Christopher Edward McClure (CRD#: 2289844, Westport, Connecticut), face charges by United States Securities and Exchange Commission (the “SEC”) for defrauding advisory customers. Specifically, on December 11, 2017, SEC filed Case 3:17cv2064 in the United States District Court for the District of Connecticut, alleging McClure, who has been with Westport Capital Markets since August 3, 2001, violated Sections 206 and 207 of the Investment Advisors Act of 1940. McClure and Westport allegedly defrauded investors, breaching fiduciary duties.

SEC Claims Christopher McClure, Westport Capital Markets Violated Fiduciary Duties

The SEC’s Complaint against McClure and Westport Capital Markets, LLC alleges that McClure and the firm had a fiduciary duty to the advisory clients. Mainly, McClure and Westport were supposedly responsible for managing the investors’ investments in the investors’ best interests. However, the SEC claimed that McClure and Westport violated fiduciary duties to those investors by defrauding them.
Apparently, McClure was responsible for choosing investments for investors’ accounts. Supposedly, McClure did not use his authority in a proper manner. Instead, McClure and Westport made purchases of securities in the investors’ accounts repeatedly. Those trades caused investors to pay mark-ups and fees that the investors did not know about. Allegedly, McClure and Westport charged investors those undisclosed fees and mark-ups separate and apart from advisory fees for managing investors’ accounts.
Furthermore, SEC alleged that McClure chose investments that contained a lot of risk and caused investors to incur big losses. McClure purportedly sold risky investments to a conservative investor. In total, Westport charged customers hidden mark-ups and fees totaling $780,000.00.

SEC Claims Christopher McClure, Westport Capital Markets Failed To Disclose Fees And Mark-Ups

From March 2012 through June 2015, McClure and Westport allegedly charged hidden mark-ups when the brokerage firm was principal. Apparently, McClure used its proprietary accounts to sell investments to investors. However, SEC claims McClure violated federal securities laws by not getting the investors’ consent before McClure and Westport executed those transactions from the firm’s account. Additionally, McClure allegedly failed to inform investors about the fees and mark-ups, preventing them from making an informed decision. Also, the Complaint alleged that McClure did not disclose conflicts of interest, which were important details investors should have received in evaluating McClure and the firm’s intentions of putting investors in high risk investments.
The Complaint also stated the firm generated unlawful 12b-1 fees. Specifically, SEC alleged that McClure took in mutual fund distribution fees upon buying mutual funds in investors accounts. Apparently, McClure did not tell investors about the additional compensation McClure and Westport generated. Not only that, but McClure and Westport supposedly put investors’ in mutual funds that produced that 12b-1 fee when there were other mutual fund share classes for the same mutual funds that McClure and Westport could have purchased for investors.
SEC stated that McClure and Westport breached a fiduciary duty to customers through defrauding the investors, omitting conflicts of interest, and failing to invest in the investors’ best interest.

Westport Capital Markets Customer Sues Over McClure’s Negligence, Breach Of Fiduciary Duty

At least one customer of Westport Capital Markets sued over McClure’s sales practice violations. Specifically, a customer filed a FINRA Arbitration #17-03501 on December 29, 2017. That customer alleged that McClure was negligent, breached a contract, breached fiduciary duties, and misrepresented and omitted facts about investments in the customer’s advisory account. Because of this, Westport Capital Markets opted to settle the customer’s claim. Accordingly, it agreed on January 2, 2018 to pay the customer $137,000.00.

Prudential Customer Files Arbitration About Unsuitable, Unauthorized Trades

Previously, McClure worked at Prudential Securities Incorporated. Apparently, a customer at that firm also contested McClure’s sales practices by filing Arbitration #03-07016. First, the customer stated that McClure made unauthorized trades. Second, McClure allegedly invested the customer’s assets in equities which were unsuitable. Third, the customer claimed that McClure improperly used margin. For these reasons, Prudential Securities Incorporated settled the customer’s claim by paying the customer $72,500.00 in compensation.

Have you experienced losses by purchasing products from Christopher McClure? If so, contact Soreide Law Group at (888) 760-6552 and speak with experienced counsel about a possible recovery of your investment losses. Soreide Law Group represents clients on a contingency fee basis and advance all costs. The firm has recovered millions of dollars for investors who have suffered losses due to misconduct of brokers and brokerage firms.