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Commonwealth Equity Services LLP et al.

Boston, MA: (Sep-05-07) The US Securities and Exchange Commission (SEC) brought charges against Commonwealth Equity Services LLP, and Detwiler, Mitchell, Fenton & Graves Inc., two Massachusetts brokerages, and James X. McCarty, of South Dennis, Mass., a former branch supervisor, alleging that they violated SEC laws by failing to supervise Bradford Bleidt, an investment manager who stole more than $31 million from customers. Bleidt is serving an 11-year federal prison term following his 2005 guilty plea on charges that he stole from more than 100 victims - including retirees, a Greek Orthodox Church and a Masons hall. The SEC alleged that Waltham-based Commonwealth failed to set up a reasonable system for responding to red flags related to Bleidt's outside business activities, and did not investigate when he failed to disclose the source of capital for a radio station that he partially owned. The commission said Detwiler, Mitchell, Fenton & Graves staff did not reasonably investigate how Bleidt was funding his outside business activities, including his two investment advisory businesses and the radio station. The Boston-based company also failed to establish reasonable procedures for the review of incoming mail and did not reasonably enforce existing procedures. McCarty was accused of not conducting the formal annual audits of each registered representative required by the two firms, and that he accepted Bleidt's explanation that the source of his money was a "trust fund" without demanding proof.

In a settlement reached, Commonwealth Equity Services LLP, and Detwiler, Mitchell, Fenton & Graves Inc. were censured and fined $250,000 each, while as McCarty was fined $50,000 and was barred from supervising any broker, dealer, or investment adviser. [BOSTON GLOBE: SUPERVISED BROKER]


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Published on Sep-14-07


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