Investment adviser sanctioned for misuse of elderly client’s account
DENVER — Colorado Securities Commissioner Gerald Rome signed an order today settling a licensing action brought against Mitchell Miller and his company, Financial Network Specialists, LLC of Englewood. In the settlement, Miller agreed to reimburse fees and pay a penalty totaling $36,500. Mitchell and Financial Network Specialists will also face a 14 day suspension of securities activities in the second half of July.
The order comes because of discoveries made during a Division of Securities examination that took place in 2017. The Division is part of the Department of Regulatory Agencies (DORA), and conducts regular audits of the investment adviser professionals licensed under the Commissioner in Colorado. Division staff alleged multiple violations of the Colorado Securities Act, including failure to have a written contract with the elderly client, charging increased advisory fees while the client did not have the capacity to make decisions, and the continued collection of advisory fees after the client’s death when no advisory services were being provided. The Division’s agreement with Miller also alleges that Miller took almost three years to disperse the client’s trust proceeds to the intended beneficiaries after her death, collecting advisory and service fees along the way.
“The population is aging, and with that comes the increased likelihood that advisers will be dealing with clients who have diminished mental capacity of some sort,” stated Rome. “The responsibility on advisers to always act in the best interests of their clients never changes, and ensuring that seniors continue to be protected under this standard is a priority of our office. This case highlights the importance of our exam program. When we discover that advisers have failed in this regard, we will use our authority to ensure that these protections, which are there for all investors, remain in place.”
Ten charities that were listed as beneficiaries of the client's trust will receive $28,000 among them as ordered by the Commissioner, while the remaining $8,500 will constitute a civil penalty payment by Miller. Should the Respondents fail to make the payments, the Commissioner will suspend both licenses until such time as the restitution and civil penalties have been paid.