Merrill Lynch pays $40 million settlement over broker churning, faces second claim for $42 million

Two clients, including the former governor of New Hampshire, alleged their broker excessively traded their accounts.

Merrill Lynch last month paid a stunning $40 million settlement to a customer who alleged his broker churned his account and is facing a similar claim for $42 million from another customer who had the same broker.

The broker, Charles E. Kenahan, was fired by Merrill on July 9. A veteran broker with more than 30 years of experience, Mr. Kenahan, who was based in Boston, had worked at Merrill Lynch since 2007. He could not be reached on Friday afternoon to comment.

A CNBC report on Friday first published the information regarding Merrill Lynch paying the $40 million settlement. CNBC also reported that Mr. Kenahan’s client was Robert Levine, co-founder of the former network equipment maker Cabletron Systems.

Mr. Kenahan was accused of making unsuitable investment recommendations and trading the account excessively, the hallmarks of broker churning, from February 2012 to December 2017.

Meanwhile, Merrill Lynch is facing another pending $42 million arbitration claim based on similar allegations, according to Mr. Kenahan’s BrokerCheck report.

That pending claim was filed last year and is being heard by the arbitration arm of the Financial Industry Regulatory Authority Inc.

CNBC reported the client who filed the $42 million arbitration claim is Craig Benson, the former governor of New Hampshire and co-founder of Cabletron with Mr. Levine.

A Merrill Lynch spokesman declined to comment about the matter.