MORRISON ANNOUNCES $450,000 SETTLEMENT TO RESOLVE ALLEGATIONS
OF SECURITIES FRAUD
356 Customer Accounts to Receive Restitution
Montana State Auditor John Morrison today announced a $450,000 settlement with Concord Equity Group LLC, a broker-dealer firm, Concord Equity Group Advisors, an investment advisory firm and Leo Lapito, a former representative for both companies. In the settlement agreements the broker-dealer firm, the advisory firm and Lapito each agreed to pay $150,000 into a restitution fund to be paid to Montana and Wyoming customers of the firms.
“Montana law requires that investors be given accurate, honest information by securities firms,” said Morrison. “These respondents violated that trust.”
The settlement agreements resolve previously filed disciplinary actions against Concord Equity Group, LLC and Concord Equity Group Advisors. In the actions Morrison alleged these companies committed securities fraud by omitting material facts their customers needed to make informed decisions regarding mutual fund purchases. Additional allegations in the actions included fraud for placing customers into fee-based accounts that were unsuitable and failure to reasonably supervise their representative, Leo Lapito.
As early as September 2003, Concord Equity customers were sold mutual funds in Class B and C shares, which the Auditor’s office alleged resulted in denying the customers opportunity for breakpoint advantages as well as higher expenses associated with the classes. The allegations also accused the companies of placing customers in over-diversified mutual fund portfolios with the same result. Additionally, the Auditor alleged the companies charged customers excessive fees by charging both a retail commission and an advisory account fee.
The Auditor’s office will begin sending letters to affected investors this week informing them of the restitution fund and how to make a claim. The restitution amount of $450,000 represents commissions, missed break points, advisory fees and sales charges that occurred in 356 customer accounts during 2003 and 2007.
"This settlement again demonstrates the commitment of our office to protect investors from fraud and abuse," said Morrison. “We will do everything in our power to protect Montanans, obtain restitution for victims and bring the perpetrators to justice."
Lapito has fully cooperated with the Auditor’s office in uncovering the evidence that led to the filing of the previous disciplinary action and the subsequent settlements. Additionally, Lapito willingly created a restitution fund to “do the right thing” for his customers. As a result of these actions, Lapito was not charged.
Any unclaimed monies from the restitution fund will be transferred to the Investor Protection Trust, a non-profit organization that provides independent, objective information needed by consumers to make informed investment decisions. Founded in 1993 as part of a multi-state settlement to resolve charges of misconduct, IPT serves as an independent source of non-commercial investor education materials. IPT operates programs under its own auspices and uses grants to underwrite important initiatives carried out by other organizations. The IPT recently provided the Montana State Auditor’s Office with a grant to provide investor education seminars throughout the state this fall in a campaign entitled Montana Investor Awareness Campaign: Targeting the People the Con Artists Target. You can find out more about the upcoming seminars by contacting (800) 332-6148.