The Maryland Securities Commissioner last month barred a small-firm financial advisor who the state regulator claimed overcharged clients $65,000 in excessive fees, as well as misinforming clients about how much they were contracted to pay annually for services.
The financial advisor, Timothy Pickett, and his firm, Blue Anchor Capital Management, were both barred from the securities industry in Maryland as of May 20, according to an amended consent order posted on the Securities Commissioner’s website.
The firm and Pickett also purchased “highly aggressive and volatile” securities that were not suitable for clients based on age and financial background, according to the Maryland order. Pickett also agreed to pay a penalty of $65,000.
Pickett did not return a phone call Friday to comment. He started working in the financial advice industry in 2003, according to his work history with the Securities and Exchange Commission (SEC), and opened the registered investment advisor Blue Anchor Capital Management in 2019.
Blue Anchor Capital Management was based in Towson, and had $5.6 million in assets and 31 client accounts, according to its most recent Form ADV filed with the SEC.
According to the Maryland order, Pickett was the sole principal and owner of, and the chief compliance officer for, Blue Anchor. Some in the financial advice industry are wary of small RIAs where the chief executive is also in charge of oversight and compliance.
“There’s an old saying that you can’t serve two masters,” said Andrew Stoltmann, a plaintiff’s attorney. “It’s impossible for someone to be the financial advisor a as well as the supervisor. That’s a classic case of the fox guarding the henhouse.”
“And these small outfits, the one or two man shops, have consistently been a regulatory landmine,” Stoltmann said. “This is just exhibit 837 in that case.”
Blue Anchor disclosed to clients in 2019 it was charging them a 2.5% fee on assets under management annually, but in fact charged some clients 3%, according to the Maryland order. The firm then updated its disclosure in 2020 to accurately reflect that fee.
The firm also provided financial planning services in conjunction with its portfolio management services but did not charge a separate fee for such services, according to the Maryland order.
Blue Anchor and Pickett charged clients’ fees in a “haphazard and inconsistent way,” according to the Maryland consent order.
In one example, one firm client in 2022 was charged fees six times in 2022, including twice in October 2022 when fees were collected from her account on October 17th and October 24th. Then, in 2024, fees were collected from the client's account on 12 occasions.
Other clients were charged fees in excess of what they should have been charged, including one client who was overcharged by about $8,000 for one of his accounts.
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