Corporate & Securities Law

A Closer Look At New England Securities

By Steven Caruso

Martin Wegener, a former financial representative for New England Securities, is accused of fleecing investors out of millions of dollars through an elaborate investment scam. The Securities and Exchange Commission (SEC) filed fraud charges against Wegener on June 14, 2010, accusing the one-time broker of scamming investors out of at least $6.5 million.

From December 1998 to May 2010, Wegener worked as a registered representative for New England Securities. According to the SEC, it?s during his employment at New England Securities that the investment scam allegedly occurred undetected.

In the SEC?s complaint, Wegener is accused of encouraging investors to withdraw funds from their New England Securities brokerage accounts so that he could, in turn, invest their money in certain publicly traded securities, publicly traded mutual funds, and other investment vehicles such as certificates of deposit or private businesses. In reality, however, Wegener deposited the money into bank accounts in the name of Wealth Resources.

As it turns out, the sole owner of Wealth Resources was Wegener.

In order to maintain the appearance of legitimate investing, Wegener provided customers with purported ?brokerage account? statements from Wealth Resources, which falsely showed that Wegener had placed their money in a variety of investments.

The SEC says that never happened. Instead, Wegener used investors? money for his personal gain.

Wegener reportedly operated his scam from at least 2007 through March 2010.

New England Securities is the licensed broker/dealer of New England Financial. Whether New England Securities could face regulatory sanctions in the future for failing to properly supervise Wegener remains to be seen. If that happens, however, it would not be the first time that New England Securities has been called on the carpet for supervisory violations.

According to the Financial Industry Regulatory Authority?s BrokerCheck, New England Securities paid a $500,000 fine in connection to that very issue in March 2009. Earlier that same year, the company was fined $1.2 million by FINRA for, among other things, failing to ?establish, implement and enforce a supervisory system designed to monitor compliance with regard to participation of associated persons in outside business activities and private securities transactions.?

On March 24, 2010, New England Securities submitted an offer of settlement with the Massachusetts Securities Division over alleged supervisory violations of former representatives and sales of promissory notes.

Full post as published by Representing Investors on July 26, 2010 (boomark / email).