A Maryland financial advisor and his firm have been barred from the securities industry in the state for violations of the investment advisory and antifraud provisions of the Maryland Securities Act.
InvestmentNews reported details of the enforcement actions that were taken against the advisor, Timothy Pickett, and the firm, Blue Anchor Capital Management, of which Pickett was the owner, sole principal, and chief compliance officer.
According to an amended consent order filed by the Maryland Securities Commissioner, Blue Anchor disclosed to clients in 2019 it was charging them a 2.5% fee on assets under management annually, but actually charged some clients 3%, and updated its disclosure the following year to accurately reflect that fee. The consent order states that fees to clients were charged in a “haphazard and inconsistent way”, citing the example of a client who was charged fees six times in 2022, and 12 times in 2024. Overall, clients were overcharged $65,000 due to excessive fees, officials said.
The investigation also determined that Pickett and Blue Anchor recommended and purchased highly aggressive and volatile securities that were not suitable for clients given their age and financial backgrounds; liquidated clients’ diversified securities portfolios and concentrating the accounts in one or two securities that were not suitable for the clients or their IRA accounts; excessively traded clients’ accounts in UVXY and UVIX and other securities, resulting in unreasonably high turnover rates that were not suitable for the clients; held UVIX in clients’ accounts for an extended period of time when the investment’s holding period was one day or less, resulting in excessive losses in clients’ accounts; and failed to disclose to clients that the investments purchased for their accounts and the investment strategies implemented in their accounts were not suitable for them.
Along with being barred, Pickett agreed to pay a penalty of $65,000. He did not return a phone call from InvestmentNews for comment prior to the report.
A plantiffs’ attorney quoted in the report cited the case as an example of the risks of having the CEO of a small RIA also overseeing compliance and oversight.
“There’s an old saying that you can’t serve two masters,” said the attorney, Andrew Stoltmann. “It’s impossible for someone to be the financial advisor as well as the supervisor. That’s a classic case of the fox guarding the henhouse.”
“And these small outfits, the one or two man shops, have consistently been a regulatory landmine,” Stoltmann said. “This is just exhibit 837 in that case.”
At Lewitas Hyman, we represent clients nationwide who are the victims of unauthorized trading, breaches of fiduciary duty and other forms of financial adviser misconduct and securities fraud. Our team of lawyers brings a diverse range of knowledge and experiences to our clients’ cases. If your financial adviser made trades without your consent, you may be able to pursue a lawsuit to recoup your losses. We’ll help you understand your rights and options. Contact us at (888) 655 6002 or email our team to learn more.
