Former New London financial adviser agrees to nearly $6 million settlement

Apr. 25—A former New London-based financial adviser has agreed to a nearly $6 million settlement that includes paying nearly $5 million in restitution to investors — including many on fixed incomes — who lost money on high-risk securities, state officials announced Thursday.

The New Hampshire Bureau of Securities Regulation said under the terms of a consent order reached with Thomas Chadwick, formerly of the investment adviser firm Chadwick & D'Amato, Chadwick has been ordered to pay $4,858,365 in restitution to former clients, many of whom are New Hampshire and Vermont residents.

Chadwick also will pay $1 million in costs and penalties, officials said.

"We are extremely pleased that this long-standing case has reached a conclusion," Brian Linares, a senior staff attorney for the Bureau of Securities Regulation, said in a statement. "Countless individuals across both New Hampshire and Vermont had their lives upended by the losses ... This settlement should serve to underscore just how important it is that financial advisers follow the law and act with the utmost care when they hold another person's financial well-being in their hands."

The Bureau of Securities Regulation alleged that Chadwick committed investment adviser fraud that resulted in more than $11.1 million in client losses.

According to the Secretary of State's Office, Chadwick's clients were primarily low- to moderate-risk investors, with most categorized as elderly and retired individuals relying on fixed-income disbursements.

According to the consent order, between the fall of 2017 and December 2021, Chadwick invested most of his clients' funds into "a risky, complex security product" that was traded under the ticker symbol REML.

REML was composed of unsecured debt securities not backed by collateral.

REML's prospectus, which acts essentially as a warning label for the product, emphasized its volatility and stated investors could lose some or all their investment, especially if they held it in their accounts for longer than a month.

Additionally, the prospectus did not recommend the product to investors who require fixed income payments from their investment accounts, the petition states.

"Despite this, Chadwick frequently concentrated between 50 to 92 percent of his clients' total investment portfolio values on REML," Bureau of Securities Regulation officials said in a statement. "He held REML shares in their accounts for an average of 386 days."

REML's share price fell steadily from the mid-$20 range in late February 2020 to just $0.52 per share — its lowest value — on March 18, 2020.

At that time, securities regulators claim, Chadwick sold approximately 580,600 of his clients' REML shares.

"Less than six days later, Chadwick encouraged his clients to repurchase REML shares with the hope that REML would recover," securities officials said.

REML ultimately was called in December 2021, with shareholders receiving $5.98 per share, regulators said.

Securities regulators alleged that Chadwick displayed "a fundamental misunderstanding of REML's complexity and risk," failed to act in his clients' best interests and "breached his fiduciary duty of care and loyalty."

In April 2022, the bureau filed a petition for emergency relief against Chadwick in a separate case, alleging he fraudulently used the usernames and passwords of 27 former clients to log into Fidelity brokerage accounts and make trades, causing a lockdown of those accounts.

Attempts to reach Chadwick on Thursday were unsuccessful.

Along with the payment of restitution, costs and penalties, Chadwick has agreed to be permanently barred from securities licensure in New Hampshire. The Bureau of Securities Regulation will not collect costs and penalties until Chadwick pays back the restitution in full, officials said in a statement.

As noted in the order, Chadwick has indicated to the bureau that he does not have the resources to immediately pay the amounts owed — which may result in the state officials pursuing a separate legal action to recover the restitution.