Two Churned Accounts Cost Merrill Lynch Over $64 Million

 After the rise and fall of Cabletron, the company he co-founded, Craig Benson served a term as governor of New Hampshire. Now, as the result of investment misadventure, he’s the recipient of the largest monetary settlement in that state’s history.

In a claim filed with FINRA, Benson asserted that needless, ill-advised trades by his Merrill Lynch brokers had cost him $50 million. The New Hampshire Department of Securities Regulation launched a probe.

“My account was churned in large part for the benefit of generating commissions that benefited Charles Kenahan, Derm Cavanaugh, but mostly Merrill Lynch,” Benson told CNBC. “I certainly didn’t sign a document and say it’s OK to steal from me."

Apparently Merrill served Benson a full diet of upmarket investments, from IPOs to leveraged and inverse products. The results were so unpalatable that the New Hampshire settlement imposes a $2 million fine on Merrill Lynch and requires the BofA unit to pay Benson restitution of $24.25 million. 

These payments also resolve Benson's FINRA claim, making it the second largest FINRA settlement involving an individual over the last decade or so. The largest?  The $40 million Merrill Lynch was required to pay Robert Levine, Benson's friend and co-founder of Cabletron.