Ex-Advisor Accused of Churning Retired Couple’s Portfolio

What You Must Know

  • The swimsuit claims the advisor executed over $75M in trades in a $3.2M portfolio in 2021.
  • The retirees say they misplaced over $800,000 in 18 months whereas the market total did nicely.

A retired Connecticut couple has accused their former funding advisor of negligence, breach of fiduciary responsibility and unfair practices, alleging he made extreme and inappropriate trades that price them greater than $800,000 over 18 months.

Terry and Nancy Chabot, Glastonbury residents, contend in a lawsuit that Samir Shehu, managing principal at Shehu Asset Administration, an RIA in Southbury, Connecticut, misplaced the “alarming” quantity whereas serving as their advisor from October 2020 till April 2022, a time when  conventional inventory and bond investments generated constructive returns.

Within the lawsuit, filed this month in Connecticut Superior Courtroom in Hartford towards Shehu, his agency and Interactive Brokers Group Inc., the brokerage he used to make trades, the Chabots contend Shehu “churned and turned over” their accounts about 50 occasions the affordable stage.

Amongst their allegations, the Chabots say Shehu misplaced appreciable principal cash by:

  • Buying and selling about $1.5 million of their cash weekly on common; in 2021 he executed greater than $75 million in trades in a $3.2 million portfolio
  • Inappropriately investing in shares when the allocation ought to have favored bonds, mutual funds or different belongings extra suited to the couple’s wants
  • Investing in unsuitable shares, together with penny shares
  • Inflicting direct funding losses and missed alternatives for positive factors they could have had in a fairly invested portfolio. Shehu additionally made hundreds of {dollars} in commissions shopping for and promoting shares that have been unsuitable for the Chabots as retirees, the couple contends.
  • Failing to advise the couple of the true nature of proposed and executed transactions to offer them a possibility to weight the attainable advantages and drawbacks.

The couple contend their securities included a fairly diversified portfolio earlier than they invested with Shehu. They discovered in April 2022 that their account had been mismanaged, which precipitated the couple emotional misery, in keeping with the lawsuit.

Along with negligence and breach of fiduciary responsibility, the Chabots accuse Shehu and his agency of negligent misrepresentation and violating the Connecticut Unfair Commerce Practices Act. The lawsuit describes his practices concerning their investments as unethical and unscrupulous.

The criticism accuses Greenwich, Conn.-based Interactive Brokers of negligence, saying the broker-dealer breached its responsibility of care to the Chabots by not inquiring concerning the suitability of trades or reaching out to the couple to make sure they understood the numerous buying and selling occurring of their names and in trusts that they had established.

Interactive’s conduct resulted within the couple’s belongings being depleted, the criticism contends.

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