Group of Elderly Nuns Taken Advantage of by Broker
What a guy?
The U.S. Securities and Exchange Commission (SEC) issued a news release announcing that a settlement had been reached with Paul George Chironis to settle charges that he had defrauded a congregation of elderly nuns. Mr. Chironis was a Long Island based broker who was found to have churned two accounts owned by the Sisters of Charity, a congregation of mostly elderly nuns living in the Bronx. One of the accounts was for the care of nuns in assisted living facilities and the other was established to support the nuns’ charitable endeavors. The investigation that had begun back in April 2010 was finally concluded when Chironis, who was affiliated with Capital Growth Financial, Inc. out of Boca Raton, FL, agreed to pay the Sisters of Charity $350,000 to settle the SEC complaint. According to Investment News, Chironis had seven customer complaints filed against him prior to going to work for Capital Growth, including claims for unsuitability and churning. Michigan Securities Division required the broker to be placed under heightened supervision in 2006 and a few months later Vermont Securities Division prohibited him from soliciting customers in Vermont.
Because of the position of trust that Chironis had established with the nuns, he was able to convince them to enter into a high turnover trading strategy that was not in keeping with their investment objectives and tolerance for risk. From January 2007 until January 2008, Mr. Chironis allegedly purchased 46 bonds and sold 38 within that same time frame. The bonds were held for 4.3 months and 35 purchases of closed end bond funds were held only 4.8 months on average. According to George S. Canellos, Director of the SEC’s New York Regional Office, the broker’s actions “virtually guaranteed the convent's accounts would lose money due to the undisclosed and excessive costs being incurred while Chironis focused on generating substantial commissions for himself." The investments included mortgage backed securities (MBS) and closed end bond funds, in addition to his charging the nuns excessive and undisclosed markups and markdowns. The SEC order specifically related that the Sisters of Charity paid approximately 10.8% of their accounts value to Chironis in transaction fees.