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Securities News Releases
Thursday, October 28, 2010
Contact: Laura Egerdal, (573) 526-0949
Carnahan Recovers $200,000 for Buchanan County Retired Investor
Jefferson City, Missouri – Missouri Secretary of State Robin Carnahan announced today that $200,000 will be returned to a Buchanan County investor who suffered losses after receiving unsuitable recommendations from Gordon Hamilton of Kansas City, an agent of Citigroup Global Markets, Inc., of New York.
According to the consent order, the 47 year-old investor was considering retirement after working for Southwestern Bell for 30 years. In 2000, he attended a retirement seminar conducted by Hamilton, who advised the investor that he could retire if he rolled his 401(k) into specific IRA accounts that were recommended by Hamilton.
The investor took the advice and retired, but the gains that Hamilton promised were unrealistic and never realized. The investor has had to return to work as a result of the decline in value of the retirement account.
"I worked 30 years to create a retirement fund that was almost stolen away from me," said the investor, now 57. "Thanks to the staff in the Securities Division, especially the investigators Judi and Charlotte who continually and diligently worked through the sea of paperwork, it was possible to recover what I lost."
The consent order states that Citigroup failed to supervise Hamilton, who made unsuitable investment recommendations regarding Internal Revenue Service Rule 72(t). Rule 72(t) allows an investor to take advantage of retirement savings through cash withdrawals from Individual Retirement Accounts (IRAs) before the age of 59˝ without paying a penalty for early distribution.
In addition to the $195,000 payment representing promised but unrealized gains, Citigroup is required to pay $75,000 to the Missouri Investor Education and Protection Fund. Hamilton is required to pay $5,000 in restitution, and both parties are jointly liable for an additional $7,500 for the costs of the Securities Division’s Investigation. Further, the registration of both Citigroup and Hamilton were censured, and Citigroup has provided the Division with revised policies and procedures regarding Rule 72(t) distributions that are designed to ensure that adequate supervision is in place.
"It's important to fully understand an investment before you sign any paperwork," said Secretary of State Robin Carnahan."Make sure that projections seem reasonable, that risks are disclosed and, most importantly, ask any questions you may have before turning over your hard-earned savings."
For more information regarding investments and fraud protection, or for information regarding a company or representative, visit the Secretary of State's online Investor Protection Center at www.MissouriSafeSavings.com or call the toll free Investor Protection Hotline at 1-800-721-7996.
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To find out more about Missouri's Secretary of State's office, visit www.sos.mo.gov