Anyone who watched the new movie Wolf of Wall Street was probably amused by some of the over-the-top shenanigans at brokerage firm Stratton Oakmont. Some thought the movie was a comedy. Unfortunately, the movie was based on the real firm Stratton Oakmont. This week, Massachusetts state securities regulators began proceedings to bar former Stratton broker Christopher Veale from ever selling securities to Massachusetts residents. Generally when a state regulator takes action the Financial Industry Regulatory Authority – FINRA – quickly follows up with nationwide sanctions.
So who is Christopher Veale? According to public records, not a very good guy in our opinion.
FINRA’s BrokerChecks system lists a staggering 21 disclosure events. (Most brokers have none.) These include 2 regulatory actions, 12 customer disputes, 6 judgments or liens and 1 criminal prosecution. We suspect that Mr. Veale doesn’t mention those statistics when touting hot investments to unsuspecting clients.
More telling, in 18 years in the securities business, Christopher Veale has been registered with 18 firms, including 3 different firms in 2012 alone. (Securities officials call this “cockroaching.”)
Massachusetts Secretary of the Commonwealth William Galvin claims that Veale engaged in abusive sales practices. One of the allegations involved an elder abuse claim in which Veale churned the account of an 81 year old man and concealed excess commissions. The term “churning” involves repeated buying and selling of securities. Each transaction earns the broker a commission. Churning involves engaging in transactions for the sake of the commissions instead of the client’s financial well being.
According to the Massachusetts complaint, Christopher Veale and another broker convinced an elderly man to invest $847,000. His account was margined as well meaning he was borrowing money to invest. In less than 2 years Veale and the other broker caused the man $1.6 million in out-of-pocket losses while earning themselves $320,000 in commissions.
Veale has denied the allegations.
According to an article in InvestmentNews, the State of Rhode Island has also now made a formal complaint against Christopher Veale and his former employer, Brookville Capital Partners.
Said Galvin in announcing the enforcement actions, “Rogue brokers have long been a plague on the investing public. My office, along with other state and federal regulators, is determined to move aggressively against them, as well as the firms that hire them.”
Veale learned from a master. According to FINRA, his first job in the industry was working with legendary Jordan Belfort (played by Leonardo DiCaprio in the movie) at Stratton Oakmont.
As noted above, this isn’t Veale’s first time in trouble. FINRA says he was arrested in Miami for felony corruption by threat against a public servant. It appears he dodged that charge after completing a pretrial diversion program.
On the regulatory front, clients have successfully complained about Veale as well. Complaints include churning, making unsuitable recommendations and breach of fiduciary duty. If that isn’t enough, he was slapped with a $503,000 tax lien last fall and American Express hit him with a judgment for $200,000.
If you think that sounds a lot like the movie Wolf of Wall Street, you are right. Except this time there are real victims including an 81 year old man who claims he lost $1.6 million. Unfortunately, the real life story isn’t funny like the movie.
The lessons in this story? First, always check BrokerCheck before investing. The regulatory record of both the broker and the brokerage firm are available instantly and for free.
Next while FINRA, the SEC and state securities regulators work hard to police the industry, there will always be bad brokers. If you have lost money because of churning, an unsuitable investment, thinly traded REIT, Ponzi scheme or other scam, contact us. Most investment fraud cases can be handled through arbitration and without legal fees unless there is a recovery.
For more information, contact the author Brian Mahany at or by telephone at (414) 704-6731 (direct). All inquiries are kept in confidence. Cases can be handled in most jurisdictions. Our minimum loss is generally $100,000 but contact us anyway if you need more information.