Four investors have initiated an arbitration claim against a Fidelity Investments unit, alleging it failed to properly oversee former investment advisor Thomas Chadwick, who they claim mismanaged their investments.
Investors Judith Barker, Jason Cayer, Richard Bates, and Maura Bates allege they lost hundreds of thousands of dollars due to Chadwick’s reckless trading strategies on Fidelity’s platform. Chadwick’s former registered investment advisory firm, Chadwick & D’Amato, used Fidelity as its custodian for asset safeguarding and other services.
The arbitration complaint, filed on Jan. 29, asserts that Chadwick could not have operated without Fidelity’s support and approval. It further claims that had Fidelity fulfilled its supervisory and regulatory responsibilities as a licensed brokerage firm, the investors would not have suffered their substantial losses.
A Fidelity spokesperson declined to comment on the matter, and Chadwick did not respond to requests for comment.
The investors are seeking financial compensation from Fidelity, filing their case with an arbitration forum overseen by the Financial Industry Regulatory Authority (Finra), the brokerage industry’s self-regulatory body.
According to their attorneys, the investors opted for arbitration rather than pursuing claims in civil court due to mandatory arbitration clauses in Fidelity account agreements. While some investors received restitution from New Hampshire’s securities regulator, their attorneys argue that none have been fully compensated for their losses.
Jason Kane, an attorney at Peiffer Wolf representing the investors, contends that Fidelity ignored clear warning signs. “If Fidelity had implemented adequate supervisory systems, this situation would never have occurred,” Kane said in a statement.
Chadwick’s Regulatory History
Chadwick operated his registered investment advisory firm in New London, N.H., from 2000 to 2021. Regulatory filings indicate that the firm managed over $60 million in assets in 2021. His clients were predominantly older investors with conservative to moderate risk tolerances, according to the New Hampshire Bureau of Securities Regulation, which launched an investigation into Chadwick in 2021.
The bureau found that beginning in 2019, Chadwick concentrated significant portions of his clients’ portfolios in REML, an investment product composed of unsecured debt securities. The bureau determined that REML was only suitable for highly aggressive investors and carried explicit warnings that it was inappropriate for those unable to withstand the risk of total investment loss.
When the COVID-19 pandemic struck in March 2020, REML’s value plummeted to nearly zero, leading to investor losses amounting to several million dollars.
In 2024, the bureau announced a consent order requiring Chadwick to pay nearly $5 million in restitution to his clients, along with a $1 million penalty. He also agreed to a permanent securities licensure ban in New Hampshire. However, regulators noted that Chadwick claimed he lacked the financial resources to pay the full amount immediately.
Chadwick is no longer a registered advisor, according to regulatory records.
Investment Strategy and Losses
The four investors filing the arbitration claim assert they were heavily invested in REML and suffered substantial losses as a result.
According to their complaint, Chadwick initially invested most of his clients’ assets in The Chadwick & D’Amato Fund, a mutual fund he co-managed. However, in 2019, the firm announced the fund’s closure, prompting Chadwick to seek alternative investment opportunities. He turned to REML, a leveraged product managed by Credit Suisse.
At the time, REML typically traded between $23 and $28 per share. However, in March 2020, its value collapsed and never recovered before ceasing trading in December 2021.
Later in 2021, Chadwick informed clients he was ending his partnership and planned to launch a new investment advisory firm. However, the firm never materialized. Instead, he requested access to some clients’ Fidelity accounts and continued providing investment advice. At the time, investors were unaware that Chadwick was no longer a registered advisor, according to the complaint.
The investors argue that Fidelity failed to detect and prevent Chadwick’s activities, allowing him to execute high-risk trades that ultimately resulted in significant financial harm. Their arbitration claim seeks to hold Fidelity accountable for its alleged supervisory lapses.
