Town trustees discuss recent SEC citation
LYNDEBOROUGH – Two years ago, the trustees of the trust funds contracted with investment adviser Mackensen and Co. of Hampton to seek a better return on the town funds in their care than the interest received from a bank.
The decision to continue with that agreement will wait until they receive findings about an investigation of the company by the state attorney general’s office.
Mackensen was recently cited by the U.S. Securities and Exchange Commission for misleading advertising from 2010-12. The company has agreed to pay a $100,000 civil penalty, and Warren J. Mackensen, CEO of the company at the time, is no longer with the firm.
On Nov. 11, trustees Stanley Greene and Gary Leblanc, as well as two representatives of Mackensen Co., Steve Stokes and David Mays, met with the Board of Selectmen to discuss the matter.
Selectman Lee Mayhew joined the conversation on speakerphone. He asked two questions at the start of the conversation: Is the company in compliance with the trustees’ policy manual and do the trustees have a contract agreement of, say, one or two years?
Greene said they are in compliance and that they have a contractual agreement that can be terminated at any time.
"They provide us a service," Greene said. "They aren’t in custody of our money."
In answer to questions, Leblanc said the trustees get a monthly report and that he could check figures online at any time.
"We’ve been happy with the rate of return" on investments, he said, "and the service they provide."
The trustees received a letter from the SEC in September, he said.
"These issues were before we began dealing with them," Leblanc said. "The state issued the cease-and-desist order from the SEC. They’ve done everything the SEC asked of them."
If the trustees are to remain with Mackensen, "We want to be sure everyone is comfortable," Leblanc said.
Greene and Leblanc described their investment policy as "middle of the road, very conservative." There are risks to any investments, he said, "But
we are dealing with town money."
Mays agreed "some advertising was done" improperly. "There wasn’t enough disclosure in the advertising. In later discussions, that was provided." Asked if the company was now "fully cognizant and aware of the rules and regulations" regarding advertising, Mays said it was.
"We fully accept what was done and are trying to move forward," he said.
Asked if the trustees were "comfortable dealing with the company," Leblanc said he was not "100 percent, but everything they’ve done for us has been positive."
He added, "If the SEC is OK with it, I’ll go along."
Greene said he was comfortable with it.
The third trustee, Chairman Richard Herfurth, was not present.
The selectmen pointed out that all decisions are made by the trustees and the selectboard has no jurisdiction, but that all three selectmen expressed some skepticism.
The trustees said they would wait to hear the decision from the attorney general’s office before making a decision. They wanted the selectmen to be aware of the situation.
The trustees oversee the town’s trust funds, including school funds dating to 1868; a dozen library accounts dating to 1921; four town trusts dating to 1894; and cemetery perpetual care funds for six cemeteries dating to the 1920s. These funds total about $100,000, and are combined for investment purposes but tracked separately for auditing.
In addition, the trustees invest the town’s capital reserve funds, mostly for fire department and highway vehicles. These funds total more than $1.3 million.
A detailed report of the funds can be found in the annual town report.