Compliance July 13, 2009

Officials Say Broker Improperly Advised Ending 401(k) Contributions

A Missouri broker who officials charge had improperly convinced investors to stop their 401(k) contributions and refinance their homes to make money available for unsuitable investments has been ordered to stop those activities.

Reported by

Fred Schneyer

A news release from Secretary of State Robin Carnahan said the Cease and Desist Order was issued against Saint Peters broker Mark McEwen, formerly employed by World Group Securities Inc. McEwen is accused of engaging in dishonest and unethical activities, making inappropriate investment recommendations to clients, and failing to disclose required information.

According to the Carnahan announcement, McEwen urged individuals to “free up cash” or retirement savings by refinancing their fixed-rate mortgages and stopping contributions to 401(k) plans and then use those funds to purchase money market funds and variable universal life policies through World Group and affiliated companies.

“It is outrageous for someone to so blatantly prey on senior investors in this way,” said Carnahan. “This case is an example of why Missourians, especially seniors, need to be very careful about who they entrust to handle their money.”

Regulators charge that McEwen also borrowed more than $130,000 from an 83-year-old Illinois resident, in violation of Missouri law and World Group’s policies and procedures.

In addition to the cease and desist order and possible penalties and costs, the Commissioner of Securities has initiated a separate proceeding to revoke McEwen’s securities registration.