Finra Bars Ex-Merrill Broker Kenahan After Record NH Settlement
An ex-Merrill Lynch broker at the center of two client churning claims that have cost his former firm over $66 million combined has agreed to a brokerage industry bar.
Kenahan had initially participated in Finra’s investigation, which began in 2018 after allegations by former customers of sales practice violations, but he ceased doing so earlier this month, the regulator said.
Kenahan’s lawyer, Daniel J. Cloherty with Todd & Weld in Boston, declined to comment.
The broker’s refusal to cooperate came after he agreed last month to a state bar by the New Hampshire Bureau of Securities Regulation as part of a $26.25 million settlement that Merrill reached with one of his former customers, ex-New Hampshire governor and Cabletron co-founder Craig Benson.
The New Hampshire order, which noted that the settlement was its largest ever, barred Kenahan for violation of state securities laws and said the transactions included unsuitable trading in IPOs of preferred stocks and inverse and leveraged ETFs as well as mismarked tickets and recommendations to trade stocks Merrill did not follow.
Merrill in 2019 also paid $40 million to Cabletron’s other co-founder, Robert Levine, as part of a separate settlement in arbitration over similar allegations of unauthorized and excessive trading and unsuitable recommendations.
Kenahan stated in a comment appended to his BrokerCheck record that he neither participated in nor contributed to the settlements. He said that the transactions that gave rise to the clients’ claims had been executed “at the customer’s direction.”
Merrill fired Kenahan in July 2019 after customer complaints about his trading activity, according to BrokerCheck. He did not register with a new firm, according to the database.
Kenahan started his brokerage career at Thomson McKinnon Securities in 1985 and also worked at Bear, Stearns & Co., and Morgan Stanley and its Smith Barney predecessor before joining Merrill in 2007.
A Merrill spokesman declined to comment.