Massachusetts securities regulators have charged A.G. Edwards & Sons Inc. with "dishonest and unethical conduct" and failure to supervise a broker who "aggressively" pursued retiring employees at Boston Edison Co. and caused them to lose a portion of their retirement assets.
Regulators in the office of Massachusetts Secretary of State William Galvin announced Wednesday that they are seeking compensation for losses of more than $1 million that the retirees allegedly incurred as the result of the activities of former A.G. Edwards broker Howard "Buck" McHugh. The complaint also seeks a censure of A.G. Edwards, an administrative fine, and reimbursement of investigation costs.
"While this broker was pressuring retirees, his superiors effectively did nothing and in some cases ran interference for him," Mr. Galvin said in a press release. "This casual approach to supervisory obligations is simply unacceptable."
A.G. Edwards, a subsidiary of a holding company owned by Wachovia Corp., at first defended Mr. McHugh's trading activities in the face of complaints from several retirees but has since paid out at least $400,000 to some victims, according to the complaint.
"But rather than acknowledge the full extent of its wrongdoing, A.G. Edwards continues to ignore many of the other complaining victims," the complaint charged.
The complaint said Mr. McHugh used a combination of "high-pressure cold-calling along with false promises and guarantees," to convince many people that accepted an early retirement offer from Boston Edison to invest with A.G. Edwards.
Mr. McHugh's pursuit of the retirees, according to the complain, was so persistent that Boston Edison's chief executive warned employees about Mr. McHugh in a mailing. His supervisor in Plymouth, Mass., warned him to stop calling the Boston Edison employees and threatened him with dismissal, but the warning did not follow Mr. McHugh when he transferred to Boston.
