brokerwatch

According to the Securities & Exchange Commission’s Investment Adviser Public Disclosure, Thomas Chadwick has been the subject of three customer disputes:

• In June 2020, Claimants filed an arbitration alleging claims relating to the handling of accounts and investments. The Claimants alleged $425,000 in damages, and the settlement value of the arbitration was $425,000. 
• In October 2020, one of Thomas Chadwick’s customers complained about alleged mismanagement of accounts which allegedly caused $450,000 in losses. As of the time of writing, the complaint is still pending.
• In February 2020, one of Thomas Chadwick’s customers complained about being invested in the Chadwick & D’Amato Fund. The complaint alleged $81,500 in damages, and the case settled for $81,500.

According to the State of Vermont’s Department of Financial Regulation December 2023 Stipulation and Consent Order, Thomas Chadwick conducted a fee-based investment advisory business through Fidelity Brokerage Services, LLC. Prior to 2019, Chadwick invested most of his clients’ assets in an SEC-registered mutual fund called “The Chadwick & D’Amato Fund,” which was managed by Chadwick and his business partner. In 2019, Chadwick & D’Amato announced that it was closing the Fund. As the fund wound down, Chadwick transferred most of his clients’ assets into money market accounts and began looking for new investment opportunities for his clients.

In April 2024, the State of New Hampshire announced that it had reached a settlement with Chadwick. Specifically, the New Hampshire Bureau of Securities Regulation entered a Consent Order with Chadwick, and ordered him to pay $4,858,364.71 in restitution to his former clients.

Throughout mid-2019 to early 2020, Thomas Chadwick invested a substantial portion of his clients’ assets into a complex, leveraged securities product known as “Credit Suisse XLinks Monthly Pay 2xLeveraged Mortgage REIT Exchange Traded Notes due July 11, 2036”

REML was a senior, unsecured debt security structured as an exchange traded note (“ETN”), that provided a monthly compounded interest of two-times leveraged long exposure to the price return of the FTSE NAREIT All Mortgage Capped Index (“FNMRC”). As a leveraged product, REML was only suitable for aggressive investors who were willing to potentially lose their entire investment. In late 2019 and early 2020, REML typically traded for between $23 to $28 per share, In March 2020, the price of REML fell rapidly, closing the month around $3.00.

Chadwick Misrepresented REML to Customers

According to the Vermont regulators, Chadwick represented REML as “not high risk[,]” good for retirees, and that REML would provide a steady monthly income. On average, for Vermont clients who incurred a loss attributable to REML, Chadwick invested around 46 percent of the assets in each client’s portfolio in REML. Chadwick lost a total of $11,108,725.09 of his clients’ assets on REML.

Fidelity Terminates Relationship with Chadwick and Chadwick & D’Amato

In December 2021, Fidelity terminated its relationship with Thomas Chadwick and his former firm, Chadwick & D’Amato. After terminating Chadwick, Fidelity informed Vermont regulators that a device it believed belonged to Chadwick and Chadwick Consulting had accessed 27 Fidelity accounts since January 1, 2022, and was using the client log-in credentials to access each account. 

Fidelity determined that the IP address associated with those log-ins matched the IP address for Chadwick & D’Amato’s former custody platform. Fidelity further indicated that various securities were purchased in the accounts and that there was a “pattern of trading” conducted in several accounts. 

As a result, Fidelity indicated to the Department that it had locked those accounts, forced password and log-in resets, and reassigned account numbers for the 27 Fidelity Accounts.

Brokerage Firms Have a Duty to Supervise their Registered Investment Advisory Business

Brokerage firms like Fidelity have a duty to supervise the businesses in which they engage, which includes their registered investment advisory business. Registered investment advisory firms like Chadwick & D’Amato and their registered representatives must undergo initial and ongoing vetting processes while joining brokerage firm platforms. 

Brokerage firms have a duty to know their customers, including their registered investment advisory firms on their platform, and comply with anti-money laundering obligations. 

A firm’s failure to properly supervise is a basis for liability, and customers may file FINRA arbitration claims to seek recovery for investment losses. 

If you believe you were a victim of investment fraud or broker misconduct, it is imperative to take action. Peiffer Wolf has represented thousands of victims and we remain committed to fighting on behalf of investors.

If you’ve invested with Thomas Chadwick, Contact Us today by filling out a Contact Form or by calling 585-310-5140 to schedule a FREE Case Evaluation.