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Financial planners' fate may hinge on AG opinion

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MacKensen & Company owner David Mayes, center, makes his case for the town keeping his firm as financial planner for the town's trust funds. (The Lebanon Voice photo)

MILTON - The owner of the financial planning firm that oversees Milton's trust fund accounts apologized for the fraudulent advertising campaign his company used that drew a censure from the SEC, but stressed the feds' reprimand was for advertising, not misappropriating or mishandling clients' funds.

"There was never a revocation or suspension of our license," said David Mayes, owner of MacKensen and Company of Hampton.

MacKensen & Company, and the firm's former owner, Warren J Mackensen, were censured in an SEC ruling on Sept. 3, which also levied a $100,000 fine on the company.

MacKensen has since ended his tenure as the firm's president and has been replaced by Mayes, but still remains on the Board of Directors.

The censure was based on an SEC finding that MacKensen & Company sent form letters from 2010-2012 to potential municipal clients that claimed actual growth figures while they were, in reality, only hypothetical, back-testing investment models.

Incidentally, Milton never received the letter determined to be fraudulently written, said Trustees of the Trust Fund chairperson Karen Brown.

A second censure noted that the company failed to develop policy to prevent such deceptive promotions among its company.

The SEC said those letters resulted in an additional 20 municipal clients for the firm.

Milton currently has almost $2 million in assets that are strategically invested by MacKensen & Company, however Mayes stressed that the funds are not held by his firm. Rather, they are deposited with National Adviser's Trust, a separate entity.

Tuesday night's joint meeting with the Board of Selectmen, Trustees of the Trust Fund and School Board allowed Mayes the opportunity to explain his firm's actions that precipitated the SEC ruling.

Mayes said he wasn't aware of the deceptive advertising, himself, and had taken steps to remedy the issue. He said the Trustees of the Trust Fund have total access to the performance of their assets and monthly statements that are vetted with National Adviser's Trust.

"Still, we're talking a lot of money here," said John Katwick, who oversees the town's cemetery trusts.

Milton Board of Selectmen Chairman Tom Gray added he'd "lost his trust" in the company in the wake of the ruling.

Town Administrator Liz Dionne said she was concerned that MacKensen, who was at the helm during the time of the misleading advertising, was still on the Board of Directors.

Mayes, who is the sole owner of the company, replied it was a contractual matter and that he had no control over it.

Brown, meanwhile, has said she is pleased with the firm's performance and they have made money for the town. They charge no hidden fees and are only compensated if they show a profit from their investment strategy.

Whether or not the town stays with MacKensen, however, could come down to the opinion from the AG's office, with whom Mayes will meet on Thursday morning.

The Charitable Trust Unit of the AG's office has opened its own investigation to determine if the SEC ruling spells trouble for the 33 New Hampshire Towns and libraries that use MacKensen.

Brown said she will be conferring with the AG's office after the meeting, and if the message is damning, they made move the funds immediately.

Trustee Stan Nadeau seemed to think MacKensen and Company may get a thumbs-up from the AG's office.

"The AG would've shut them down already if the magnitude (of the offense) was so great," he said.

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