A Massachusetts advisor herded dozens of unsuspecting investors into a risky, "one-size-fit-all" investment strategy, state securities' regulators allege.
Bruce Taylor Cameron worked with Massachusetts investors for more than 20 years as a representative of RBC Capital Markets, regulators said. He is charged with pushing clients to invest in Master Limited Partnerships in the risky energy sector. RBC is named in the complaint for allegedly failing to monitor Cameron.
"Over the last decade, Cameron developed a one-size-fits-all investment strategy which ignored RBC’s internal compliance procedures, and RBC similarly failed to address Cameron’s actions," the complaint read. "For much of this time, Cameron was registered as a broker-dealer agent and investment adviser representative in Massachusetts."
Secretary of the Commonwealth William Galvin's office seeks a return of gains, a fine and other punishments against both Cameron and RBC. Cameron's broker-dealer license would be suspended under the complaint.
Cameron began recommending MLPs in 2013, the complaint said. MLPs are typically used in the energy sector and are a unique investment that combines the liquidity of a common stock with the tax liability of a partnership.
"The value of a given energy sector MLP product is tied directly to the price of the natural resource underlying the MLP, be it oil, natural gas, or other natural gas byproducts," the complaint said. "As such, energy sector MLPs expose investors to significant risk of loss if the energy market fails to perform as expected."
In addition, there are significant tax implications, which can be detrimental to retirement or other tax-exempt accounts.
RBC does not allow its advisers to concentrate more than 30% of a client’s account in a single sector, the complaint noted. Yet, Cameron routinely invested 50% or more of his clients’ accounts in energy sector MLPs and securities.
"Cameron would also heavily invest his clients’ accounts in energy sector MLPs and securities irrespective of the clients’ circumstances, also directly against RBC’s policies," the complaint said. "Cameron failed to adequately consider the investment objectives of his clients’ accounts when concentrating their assets in the energy sector."
In total, Cameron recommended the purchase or sale of at least $30 million worth of energy sector MLPs between 2013 and 2017, the complaint said.
During that time, RBC’s compliance software, ProSurv, flagged just 36 out of the over 700 MLP transactions Cameron executed as "potentially overconcentrating client accounts in a single sector," the complaint said.
"In every case, RBC put its stamp of approval on these flagged transactions," the complaint said. "RBC’s rubber-stamping of its representatives’ recommendations put its clients and their finances at risk."
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at firstname.lastname@example.org. Follow him on Twitter @INNJohnH.
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